November 13, 2023

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Simon Carter, CEO said: “We are pleased with the performance in the first half with underlying profits increasing 3% on the back of another strong period of leasing and good cost control. We have seen yields continue to move out, but as we predicted in May, at a slower pace. Rental growth has accelerated, with lettings 12% ahead of ERV, and occupancy remains strong at 96% well above levels in the wider market.

We are benefitting from our decision to pursue a value-add strategy across campuses, retail parks and London urban logistics. These submarkets have the strongest occupational fundamentals and highest rental growth within the office, retail and logistics sectors. We now expect ERV growth at the top end of our previous guidance for FY24.

Whilst in the past 18 months we have delivered good earnings growth, asset values have been impacted by the increase in interest rates. The geopolitical and economic landscape remains uncertain; however, with our portfolio yield now over 6% and an increased likelihood we are approaching the peak in UK base rates we expect the strong occupational fundamentals of our submarkets, together with the differentiated quality of our assets, to reassert themselves as the primary drivers of performance.”

FINANCIAL
  • Underlying Profit growth of 3.4%
  • EPRA cost ratio 14.8% vs 19.5% at FY23
  • Underlying earnings per share of 15.2p up 3.4%
  • Dividend per share of 12.16p up 4.8%
BALANCE SHEET
  • EPRA Net Tangible Assets per share of 565p down 3.9%
  • Loan To Value at 36.9% (FY23 36.0%), Group Net Debt to EBITDA 6.0x (FY23 6.4x)
  • Fitch affirmed our Senior Unsecured credit rating at ‘A’ with stable outlook
  • £1.7bn undrawn facilities and cash
  • £600m of financing activity, including £350m new loans post period end which further increase our capacity
  • Debt 99% hedged for the six months to March 2024 and 84% hedged on average over the next five years
CAPITAL ACTIVITY
  • Sale of office and data centre portfolio for £125m1, 13% above book value at a NIY of 4.6%
  • Surrender of 1 Triton Square lease on 25 September 2023 for £149m
  • Acquisition of Thanet Retail Park in April 2023 for £55m at a NIY of 8.1%
OPERATIONAL METRICS
  • Portfolio occupancy 96%: Campuses 94%, Retail Parks 99% and London Urban Logistics 100%
  • Leased 1.6m sq ft, 12.2% ahead of ERV and a further 1.1m sq ft under offer, 16.6% above ERV
  • Campus leasing 368,000 sq ft, 7.5% ahead of ERV, 281,000 sq ft under offer, 9.7% above ERV and 1.8m sq ft in negotiations on 1.0m sq ft of space (including near term pipeline)
  • Retail & London Urban Logistics leasing 1.2m sq ft, 14.2% ahead of ERV, and 844,000 sq ft under offer, 20.5% ahead of ERV
PORTFOLIO VALUATION
  • ERV growth of +3.2%: Campuses +3.2%, Retail Parks +4.0%, London Urban Logistics +3.1%
  • Yields +23bps to 6.1% NEY: Campuses +32bps to 5.3%, Retail Parks +13bps to 6.7%, London Urban Logistics +9bps to 4.7%
  • Values down 2.5%: Campuses -4.0%, Retail Parks up +0.2% and London Urban Logistics up +0.6%
SUSTAINABILITY
  • GRESB rating of 5* for both standing investments and developments
  • 50% of portfolio rated EPC A or B (up from 45% at FY23)
OUTLOOK
  • Expecting ERV growth at the top end of our previously guided ranges for FY24: Campuses 2-4%, Retail Parks 3-5%, London Urban Logistics 4-5%
  • Comfortable with current market expectations for FY24 earnings
Summary performance
Period ended30 September 202330 September 20222% Change
INCOME STATEMENT   
Underlying Profit3£142m£138m3.4%
Underlying earnings per share315.2p14.7p3.4%
IFRS loss after tax£(61)m£(32)m 
IFRS basic earnings per share(6.6)p(3.5)p 
Dividend per share412.16p11.60p4.8%
Total accounting return3(2.0)%(2.8)% 
    
As at30 September 202331 March 2023 
BALANCE SHEET   
Portfolio at valuation (proportionally consolidated)5£8,704m£8,898m(2.5)%
EPRA Net Tangible Assets per share3565p588p(3.9)%
IFRS net assets£5,367m£5,525m 
Net Debt to EBITDA (Group)6, 76.0x6.4x 
Loan to value (proportionally consolidated)7, 836.9%36.0% 
Senior Unsecured credit ratingAA 
    
Period ended30 September 202330 September 2022 
OPERATIONAL STATISTICS 
Lettings and renewals over 1 year1.3m sq ft1.1m sq ft 
Total lettings and renewals1.6m sq ft1.5m sq ft 
Committed and recently completed development1.9m sq ft1.7m sq ft 
SUSTAINABILITY PERFORMANCE   
MSCI ESGAAA rating AAA rating 
GRESB (Standing Investments / Developments)5* / 5*4* / 5* 

1 Of which £29m completed post period end (see page 1).

2 Prior period comparatives have been restated for a change in accounting policies in respect of rental concessions (as disclosed in Note 1 of the condensed interim financial statements).

3 See Note 2 to the condensed interim financial statements for definition and calculation.

4 The growth in the dividend is higher than the Underlying EPS growth due to the impact of the rental concession restatement in the prior period.

5 Valuation movement during the period (after taking account of capex) of properties held at the balance sheet date, including developments (classified by end use), purchases, sales and surrender premium received at 1 Triton Square.

6 Net Debt to EBITDA on a Group basis excludes non-recourse and joint venture borrowings and includes distributions from non-recourse companies and joint ventures.

7 See Note 9 to the condensed interim financial statements for definition, calculation and reference to IFRS metrics.

8 EPRA Loan to value is disclosed in Table E of the condensed interim financial statements.

Results Presentation and Investor Conference Call

A presentation of the results will take place at 9.00am on Monday 13 November 2023 at Peel Hunt, 100 Liverpool Street, Broadgate and will be broadcast live via webcast (www.britishland.com) and conference call. The details for the conference call and weblink are as follows:

UK Toll Free Number:0800 260 6466
International:+44 20 3481 4247
Access code:9857826
Click for access:Audio weblink
A dial in replay will be available later in the day for 7 days. The details are as follows:
Replay number:020 3433 3849
Passcode:9857826
Accompanying slides will be made available at Britishland.com just prior to the event starting.
For Information Contact
Investors 
Sandra Moura, British Land07989 755535
Media 
Charlotte Whitley, British Land07887 802535
Guy Lamming/Gordon Simpson, FGS Global020 7251 3801
 [email protected]