The British Land Company PLC Robust performance following £1.2bn of net sales

The British Land Company PLC (LON:BLND), today announced half year results.

Chris Grigg, Chief Executive of British Land said: “This has been another period of good operational and strategic progress. Our London office developments are letting up ahead of schedule and on better terms than expected – a clear endorsement of our campus offering and the quality of space we are delivering. In a particularly challenging retail market, we remained focused on delivering operationally day-to-day while at the same time progressing our strategy and refining our portfolio. With £634m of retail assets sold or under offer in the last 12 months, we have sold a total of £2.8bn since April 2014. We remain thoughtful in our capital allocation, extending our share buyback after selling 5 Broadgate at book value. At the same time, we again reduced leverage so we are well placed to further progress the strategic initiatives we set out in May to build an increasingly mixed use business.

Looking forward, demand for the highest quality London office space is expected to continue, but we remain alert to potential uncertainties as the Brexit process unfolds. We expect retail to remain challenging in both the occupier and investment markets as the impact of long-term structural change is compounded by short-term headwinds. Against this backdrop, our strategy is clear, consistent and focused on the long term. We have created attractive options across our business to drive future growth and benefit from the expertise, financial strength and flexibility to deliver them.”

Financial highlights

· Robust performance following £1.2bn of net sales of income producing assets in 18 months

· Strong 5.8% LFL rental growth in Offices more than offset £6m impact of CVAs & Admins

· Underlying EPS down 10% due to impact of one off surrender premia received last year

· Half year dividend up 3.0% to 15.50p

· Portfolio value down 1.9%; Retail down 4.5% and Offices up 0.7% with developments up 7.2%

· EPRA NAV 939p, down 2.9%; total accounting return of -1.3% (H118: +4.2%)

· Strong and flexible balance sheet with a disciplined approach to capital allocation

· £842m of asset sales, further reducing leverage to 26.7% (March 2018: 28.4%)

· 5 Broadgate sold for £1bn (our share £500m), delivering 18% return per annum

· £1.3bn of financing activity including £1.1bn of new debt facilities

· £94m of the £200m share buyback extension completed as at 13 November 2018

Progress on strategy

· Campus-focused London Offices: Unique campus offer is delivering

· 273,000 sq ft of leasing activity generating £7.5m of future headline rents; 98% occupancy

· Additional 148,000 sq ft let to McCann post period end; under offer on a further 162,000 sq ft

· Lettings and renewals on the investment portfolio 6.5% ahead of ERV

· Committed development pipeline generating £63m of future rent, now 69% pre-let/under offer

· Speculative development exposure remains low at 3.7%

· Storey operational across 130,000 sq ft; 87% let or under offer; further 186,000 sq ft identified

· Smaller, more focused Retail: Operational outperformance in a challenging market

· 457,000 sq ft of leasing activity; 5.0% ahead of ERV; 98% occupancy

· Continue to outperform benchmarks: total sales 150 bps ahead; footfall 210 bps ahead

· £634m assets sold or under offer in the last 12 months

· Annualised rental impact of CVAs & Admins over the last 18 months of £14.7m of which £5.5m already let or in negotiation

· Residential, principally Build to Rent: Working to establish scale in this growth market

· Exclusive discussions ongoing to acquire an operator to enhance scale and operational expertise

· 4,000 – 5,000 residential unit opportunities identified across our portfolio, including Canada Water

Summary

¹ 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 and sales

² See Note 2 to the condensed interim set of financial statements

³ Including 148,000 sq ft let to McCann post period end