Landsec ─ Appendices

1

Contents

Page

Sustainability

Sustainability leadership

2

Our sustainability programme

3-4

Our portfolio - sustainability performance of our assets

5

Page

Reversionary potential - like-for-like portfolio

17

Reconciliation of cash rents and P&L rents to ERV

18

Combined Portfolio - lease maturities

19

Page

Financing

30

The Security Group - summary

31

The Security Group - portfolio concentration limits

32

Our net zero strategy

6

Asset performance

Top 10 assets by value - as at 30 September 2020

7

Valuation movements - as at 30 September 2020

8

Yield movements - like-for-like portfolio

9

Rental and capital value trends - like-for-like portfolio

10

Rental and capital value trends - Central London

11

like-for-like portfolio

Rental and capital value trends - Regional retail

12

and Urban opportunities like-for-like portfolios

Rental and lease analysis expiries and breaks

Central London portfolio

13

Regional retail portfolio

14

Urban opportunities portfolio

15

Subscale sectors portfolio

16

Retail analysis

Retail sales and footfall

20

Top retail and leisure occupiers by percentage

21

of Group rent

Company voluntary arrangements (CVA)

22

CVA/Administration exposure by occupier

23

CVA/Administration analysis by annualised

24

rental income

Voids and units in administration

25

Financial data and performance

Financial history - adjusted diluted earnings per share

26

and dividend per share

Cash flow and adjusted net debt

27

Financial history - adjusted diluted net assets per share

28

and Group LTV

Expected debt maturities (nominal)

29

Development and market analysis

Office-led development programme returns

33

Pipeline of office-led development opportunities

34

Pipeline of Urban opportunities

35

Committed capital expenditure

36

Property/gilt yield spread

37

Central London investment market

38

Central London quarterly take-up

39

Central London rolling 12-monthtake-up

40

Central London availability and vacancy rate

41

Central London secondhand supply vs rental value growth

42

London Office market availability - grade A vs.

43

secondhand space

Central London supply as at 30 September 2020

44-45

Central London office market

46

Portfolio segmental split aligned to strategic priorities

47

Landsec ─ Appendices

2

Sustainability leadership

Demonstrated by our performance across all key ESG benchmarks

Benchmark

Latest performance

GRESB 2019

5 star rated entity, score 90%.

Sector leader, ranking 1st in Europe and UK diversified office/retail (mixed)

CDP 2019

A-list (top 2%) for the third year running.

The only A-list UK REIT

DJSI 2019

Score 82/top 98th percentile.

European Real Estate leader, ranking 4th globally

Benchmark

Latest performance

Ecoact 2020

Ranked 3rd amongst FTSE 100 companies

for our sustainability reporting and climate-related

strategy (ranked 5th in 2019)

EPRA 2020

Received our 7th Gold Award for best practice

sustainability reporting

FTSE4Good 2020

94th percentile. We continue to retain our

established position in the FTSE4Good Index

ISS ESG 2020

Prime status. Rating C+

Decile rank 1/transparency level: very high

MSCI ESG Rating 2020

A rating

Sustainalytics ESG Risk Rating 2020

10.9 (low risk) / ranking 32 out of 951 companies in the real estate industry

The 2020 results for some ESG benchmarks haven't been released in time for the half-yearly results announcement. In these instances, we have included the 2019 results.

Landsec ─ Appendices

3

Our sustainability programme

Ambitious commitments split into three core areas

Creating jobs and opportunities

Community employment

Create £25m of social value through our community programmes by 2025

Fairness

By 2020, ensure everyone working on our behalf, in an environment we control, is given equal opportunities, protected from discrimination and paid at least the Real Living Wage

Efficient use of natural resources

Carbon

Reduce carbon emissions by 70% by 2030 compared with a 2013/14 baseline, for property under our management for at least two years

Renewables

Ensure 100% of our electricity supplies through our corporate contract are from REGO-backed renewable sources and achieve 3 MW of renewable electricity capacity by 2030

Sustainable design and innovation

Resilience

Assess and mitigate physical and financial climate change adaptation risks that are material across our portfolio

Materials

Source core construction products and materials from ethical and sustainable sources

Diversity

Make measurable improvements to the profile - in terms of gender, ethnicity and disability - of our employee mix

Energy

Reduce energy intensity by 40% by 2030 compared with a 2013/14 baseline, for property under our management for at least two years

Biodiversity

Maximise the biodiversity potential of all our development sites and achieve a 25% biodiversity net gain across our five sites with the greatest potential by 2030

Health, safety and security

Maintain an exceptional standard of health, safety and security in all the working environments we control

Waste

Send zero waste to landfill and at least 75% waste recycled across all our operational activities by 2020

Wellbeing

Ensure our buildings are designed and managed to maximise wellbeing and productivity

Landsec ─ Appendices

Our sustainability programme

Delivering significant results across all areas

4

Creating jobs and opportunities

Social Value

Created more than £3.6m of social value through our community programmes in the first six months of the year

Fairness

Continue to be an accredited Real Living Wage employer. To ensure fair treatment of workers in our supply chain, we surveyed 91 people working on our sites on issues such as modern slavery and discrimination

Efficient use of natural resources

Carbon

Reduced carbon emissions by 46% since 2013/14 against our updated science-based carbon reduction target

Renewables

Continued to procure 100% renewable electricity across our portfolio through our corporate contract. Our current on site renewable electricity capacity has reached 1.5 MW

Sustainable design and innovation

Resilience

Updated our assessment of physical and transition risks, ensuring our alignment with the TCFD recommendations

Materials

Created a prohibited materials list to guide our supply partners and mitigate human rights risks.

99.9% of key construction materials responsibly sourced

Diversity

Across the whole organisation 52% of our employees are female, exceeding our 2025 target of 50%. In the representation of women at leader level, we increased to 24% in 2019-20

Health and safety

Migrated to ISO 45001 and launched a new mandatory health and safety training for all employees. We have ensured that all our assets are Covid-19risk-assessed and secure

Energy

Reduced energy intensity by 32% since 2013/14 against our 2030 target

Waste

Continued to divert 100% from landfill and we're recycling 71% of operational waste

Biodiversity

Continue to partner with The Wildlife Trusts to enhance biodiversity net gain at our five operational sites. On track to deliver significant net gain on our developments

Wellbeing

Pursuing WELL Portfolio rating programme across our office portfolio.

All live developments successfully pre-assessed against WELL Core rating

Landsec ─ Appendices

5

Our portfolio

Sustainability performance of our assets

  • 46% reduction in carbon emissions (tCO2e) compared to 2013/14 baseline
  • 32% reduction in energy intensity (kWh/m2) compared to 2013/14 baseline
  • Zero waste sent to landfill with 71% of waste recycled
  • 40% BREEAM certified by portfolio floor area
  • 0.2% - Outstanding

3% -

1%

48%

44%

7%

Very

- 2.8% - Goo

CGI of n2, SW1

Landsec ─ Appendices

6

Our net zero strategy

Reduce operational

Invest in

Use an internal price

Reduce construction

Offset remaining

energy use

renewable energy

of carbon

impacts

carbon

Reduce operational

Invest in renewable energy

Use an internal shadow

Reduce construction

Offset remaining

energy use in support

through REGO-backed

price of carbon to clearly

impacts through asset

emissions through

of our updated science-

contracts and Power

communicate climate-

retention, efficient

carefully selected

based carbon reduction

Purchase Agreements

related risks and

design and responsible

projects which actively

target, aligned with a

and implement on-site

opportunities in

sourcing

take carbon out of

1.5°C scenario

renewable across our assets

investment decisions

the atmosphere

Progress on key areas in HY 2020-21

Reduction of operational carbon emissions: Delivered a 46% reduction in carbon emissions compared with 2013/14 baseline, keeping us on track to achieve our science- based target aligned with a 1.5oC scenario to reduce emissions by 70% by 2030

Reduction of construction carbon emissions: Low-carbon design and construction method led to a further 10% reduction of embodied carbon intensity at Lavington Street,

on a design already c.50% lower than a typical new build. Our procured developments are making progress reducing embodied carbon against developed design baseline: 21% reduction at The Forge and 18% reduction at Lucent. Prioritising the refurbishment of assets, such as Portland House, led to an embodied carbon intensity c.65% lower than

a new build

Internal carbon pricing: Modelling of the internal shadow price of carbon with our investment teams included in Investment Committee papers to prepare the business for a potential future real carbon price

Landsec ─ Appendices

7

Top 10 assets by value

As at 30 September 2020

Name

New Street Square, EC4

Cardinal Place, SW1

One New Change, EC4

1 & 2 New Ludgate, EC4

21 Moorfields, EC2

Gunwharf Quays, Portsmouth

Queen Anne's Gate, SW1

Nova, SW1

62 Buckingham Gate, SW1

Piccadilly Lights, SW1

Ownership

Floor

Rental

Let

Weighted

interest

area

income(1)

by income

average unexpired

lease term

%

Sq ft (000)

£m

%

Years

100

Office:

932

54

100

8.3

Retail:

22

100

Office:

459

32

99

3.9

Retail:

57

100

Office:

348

28

99

4.7

Retail:

210

100

Office:

369

23

100

12.2

Retail:

27

100

Office:

564(2)

Development in progress

100(3)

25.0

100

Retail:

552

23

98

3.9

100

Office:

354

35

100

6.2

50

Office:

480

15

100

9.8

Retail:

76

100

Office:

261

19

100

4.5

Retail:

17

100

-

11

100

5.7

Aggregate value of top 10 assets: £5.5bn (46% of Combined Portfolio)

  1. Landsec share. Annualised net rent is annual cash rent, after the deduction of rent payable, as at the balance sheet date
  2. Development area
  3. Pre-letto Deutsche Bank

Landsec ─ Appendices

8

Valuation movements

As at 30 September 2020

Market value

Valuation

Rental value

Net initial

30 September 2020

change

change(1)

yield

£m

%

%

%

Offices

5,817

-1.9

-1.0

4.4

London retail

728

-16.8

-16.5

4.4

Other central London

426

-

-

2.7

Regional shopping centres and shops

1,339

-20.4

-14.4

7.0

Outlets

805

-8.8

-1.3

4.8

Urban opportunities

423

-9.8

-5.8

5.0

Leisure

528

-15.3

-3.9

6.3

Hotels

408

-13.1

-13.2

3.5

Retail parks

411

-7.3

-6.1

7.4

Total like-for-like portfolio

10,885

-8.0

-5.7

4.9

Proposed developments

276

-9.4

n/a

-

Development programme

630

-1.2

n/a

-

Acquisitions

52

-17.0

n/a

4.1

Total Combined Portfolio

11,843

-7.7

-5.7

4.5

Offices

6,721

-2.3

3.8

London retail

744

-16.7

4.4

Other central London

426

0.2

2.7

Regional shopping centres and shops

1,339

-20.4

7.0

Outlets

805

-8.8

4.8

Urban opportunities

436

-9.8

4.9

Leisure

553

-15.3

6.3

Hotels

408

-13.1

3.5

Retail parks

411

-7.3

7.4

Total Combined Portfolio

11,843

-7.7

4.5

Equivalent

Movement in

yield

equivalent yield

%

bps

4.6

2

4.4

12

4.3

-

6.6

42

6.3

38

5.3

15

7.1

70

5.4

27

7.6

16

5.2

11

n/a

n/a

4.3

n/a

4.6

n/a

5.2

11

(1) Rental value change figures exclude units materially altered during the period and other non like-for-like movements

Landsec ─ Appendices

9

Yield movements

Like-for-like portfolio

30 September 2020

31 March 2020

Net initial

Equivalent

Topped-up net

Net initial

Equivalent

yield

yield

initial yield(1)

yield

yield

%

%

%

%

%

Offices

4.4

4.6

4.6

4.3

4.6

London retail

4.4

4.4

4.5

4.4

4.2

Other central London

2.7

4.3

2.7

3.4

4.3

Regional shopping centres and shops

7.0

6.6

7.3

6.4

6.2

Outlets

4.8

6.3

5.2

5.6

5.9

Urban opportunities

5.0

5.3

5.1

4.9

5.2

Leisure

6.3

7.1

6.6

5.8

6.4

Hotels

3.5

5.4

3.5

2.3

5.2

Retail parks

7.4

7.6

7.8

7.6

7.4

TOTAL LIKE-FOR-LIKE PORTFOLIO

4.9

5.2

5.1

4.8

5.1

(1) Topped-up net initial yield adjusted to reflect the annualised cash rent that will apply at the expiry of current lease incentives

Landsec ─ Appendices

10

Rental and capital value trends

Like-for-like portfolio

Like-for-like portfolio value at 30 September 2020: £10,885m

Rental value change

Valuation change

Central London

Regional retail

Urban opportunities

Subscale sectors

TOTAL LFL PORTFOLIO

Central London - offices

Retail(1)

Six months ended 30.09.19

Six months ended 31.03.20

Six months ended 30.09.20

%

%

%

1.3

2.0

-2.7

-0.2

-0.2

-3.7

-2.1

-3.9

-10.1

-6.4

-15.9

-16.4

-3.6

-1.7

-5.8

-5.8

-13.1

-9.8

-1.5

-2.5

-7.2

-5.6

-10.2

-12.3

-0.4

-0.7

-5.7

-2.9

-6.4

-8.0

1.9

2.7

-1.0

0.3

1.6

-1.9

-2.3

-3.9

-10.2

-6.3

-14.5

-14.9

(1) Retail is London retail, shopping centres and shops, outlets, Urban opportunities (excluding North Leisure Retail Park) and retail parks

Landsec ─ Appendices

11

Rental and capital value trends

Central London like-for-like portfolio

Central London like-for-like portfolio value at 30 September 2020: £6,971m

Rental value change

Valuation change

Six months ended 30.09.19

Six months ended 31.03.20

Six months ended 30.09.20

%

%

%

1.9

2.7

-1.0

Offices

0.3

1.6

-1.9

-2.0

-3.7

-16.5

London retail

-3.5

-10.4

-16.8

-

4.5

-

Other central London

0.4

1.3

-

1.3

2.0

-2.7

CENTRAL LONDON

-0.2

-0.2

-3.7

(1) Rental value change figures exclude units materially altered during the period and other non like-for-like movements

Landsec ─ Appendices

12

Rental and capital value trends

Regional retail and Urban opportunities like-for-like portfolios

Regional retail and Urban opportunities like-for-like portfolio value at 30 September 2020: £2,567m

Rental value change

Valuation change

Six months ended 30.09.19

Six months ended 31.03.20

Six months ended 30.09.20

%

%

%

-3.6

-6.4

-14.4

Regional shopping centres and shops

-9.3

-18.1

-20.4

1.3

1.8

-1.3

Outlets

0.6

-10.8

-8.8

-2.1

-3.9

-10.1

REGIONAL RETAIL

-6.4

-15.9

-16.4

-3.6

-1.7

-5.8

URBAN OPPORTUNITIES

-5.8

-13.1

-9.8

(1) Rental value change figures exclude units materially altered during the period and other non like-for-like movements

Landsec ─ Appendices

13

Rent reviews and lease expiries and breaks(1)

Central London excluding developments

Outstanding

2020/21

2021/22

2022/23

2023/24

2024/25

£m

£m

£m

£m

£m

£m

Rents passing from leases subject to review

52

31

43

34

23

2

Adjusted ERV(2)

51

30

42

34

24

3

Over-renting(3)

(2)

(1)

(1)

-

-

-

Gross reversion under lease provisions

1

-

-

-

1

1

2020/21

2021/22

2022/23

2023/24

2024/25

£m

£m

£m

£m

£m

Rents passing from leases subject to expiries or breaks

10

11

32

25

14

ERV

12

11

35

26

14

Potential rent change

2

0

3

1

-

Total reversion from rent reviews and expiries or breaks

Voids and tenants in administration(4)

Total

  1. This is not a forecast and takes no account of increases or decreases in ERV before the relevant review dates
  2. Adjusted ERV reflects ERV when reversion is expected at next rent review, or passing rent where the reversion to ERV is expected after 2025
  3. Not crystallised at rent review because of upward only rent review provisions
  4. Excludes tenants in administration where the administrator continues to pay rent

Total to 2025

£m

185

184

(4)

3

Total to 2025

£m

92

98

6

9

7

16

Landsec ─ Appendices

14

Rent reviews and lease expiries and breaks(1)

Regional retail excluding developments

Outstanding

2020/21

2021/22

2022/23

2023/24

2024/25

£m

£m

£m

£m

£m

£m

Rents passing from leases subject to review(4)

33

22

18

11

5

1

Adjusted ERV(2)

30

24

15

10

4

1

Over-renting(3)

(7)

(1)

(4)

(2)

(1)

-

Gross reversion under lease provisions

4

3

1

1

-

-

2020/21

2021/22

2022/23

2023/24

2024/25

£m

£m

£m

£m

£m

Rents passing from leases subject to expiries or breaks(4)

17

17

26

21

14

ERV

20

15

21

16

13

Potential rent change

3

(2)

(5)

(5)

(1)

Total reversion from rent reviews and expiries or breaks

Voids and tenants in administration(4)

Total

  1. This is not a forecast and takes no account of increases or decreases in ERV before the relevant review dates
  2. Adjusted ERV reflects ERV when reversion is expected at next rent review, or passing rent where the reversion to ERV is expected after 2025
  3. Not crystallised at rent review because of upward only rent review provisions
  4. Annualised rents have been reduced to reflect the impact of Covid-19 on turnover, this has driven an increase in revisionary potential across Retail

Total to 2025

£m

90

84

(15)

9

Total to 2025

£m

95

85

(10)

(1)

15

14

Landsec ─ Appendices

15

Rent reviews and lease expiries and breaks(1)

Urban opportunities excluding developments

Outstanding

2020/21

2021/22

2022/23

2023/24

2024/25

£m

£m

£m

£m

£m

£m

Rents passing from leases subject to review

6

1

1

2

3

-

Adjusted ERV(2)

5

1

1

1

3

-

Over-renting(3)

(2)

-

-

(1)

-

-

Gross reversion under lease provisions

1

-

-

-

-

-

2020/21

2021/22

2022/23

2023/24

2024/25

£m

£m

£m

£m

£m

Rents passing from leases subject to expiries or breaks

1

4

2

4

1

ERV

2

3

1

4

1

Potential rent change

1

(1)

(1)

-

-

Total reversion from rent reviews and expiries or breaks

Voids and tenants in administration(4)

Total

  1. This is not a forecast and takes no account of increases or decreases in ERV before the relevant review dates
  2. Adjusted ERV reflects ERV when reversion is expected at next rent review, or passing rent where the reversion to ERV is expected after 2025
  3. Not crystallised at rent review because of upward only rent review provisions
  4. Excludes tenants in administration where the administrator continues to pay rent

Total to 2025

£m

13

11

(3)

1

Total to 2025

£m

12

11

(1)

-

2

2

Landsec ─ Appendices

16

Rent reviews and lease expiries and breaks(1)

Subscale sectors excluding developments

Outstanding

2020/21

2021/22

2022/23

2023/24

2024/25

£m

£m

£m

£m

£m

£m

Rents passing from leases subject to review

26

7

5

5

8

5

Adjusted ERV(2)

24

7

4

4

7

5

Over-renting(3)

(4)

-

(1)

(1)

(1)

(1)

Gross reversion under lease provisions

2

-

-

-

-

1

2020/21

2021/22

2022/23

2023/24

2024/25

£m

£m

£m

£m

£m

Rents passing from leases subject to expiries or breaks

1

4

5

7

13

ERV

1

3

5

5

11

Potential rent change

-

(1)

-

(2)

(2)

Total reversion from rent reviews and expiries or breaks

Voids and tenants in administration(4)

Total

  1. This is not a forecast and takes no account of increases or decreases in ERV before the relevant review dates
  2. Adjusted ERV reflects ERV when reversion is expected at next rent review, or passing rent where the reversion to ERV is expected after 2025
  3. Not crystallised at rent review because of upward only rent review provisions
  4. Excludes tenants in administration where the administrator continues to pay rent

Total to 2025

£m

56

51

(8)

3

Total to 2025

£m

30

25

(5)

(2)

4

2

Landsec ─ Appendices

17

Reversionary potential

Like-for-like portfolio

Net reversionary potential(1)

%

%

Reversionary potential(1) at 30 September 2020

%

7.9

1.4

-3.3

September 2019

-3.1

-1.3

-5.5

-1.3

3.8

-3.9

March 2020

-4.5

-0.9

-6.5

-0.9

-0.7

0.9

-4.6

September 2020

-7.0

-2.8

-2.6

-6.0

-2.6

Central London - offices

Central London

Urban opportunities

Retail(3)

Total Portfolio

Total Portfolio

1.1

1.1

2.5

2.7

Regional retail Subscale sectors

Offices(2)

London retail

Regional shopping centres and shops

Outlets

Urban opportunities

Leisure

Retail parks

TOTAL PORTFOLIO(2)

Central London - offices

Retail(3)

-7.0

0.9

-21.3

8.2

-13.1

-26.0

10.8

-15.2

-2.9

-16.3

13.5

-2.8

-12.8

13.3

0.5

-21.0

7.3

-13.6

-12.7

10.2

-2.6

-7.0

7.9

0.9

-19.8

12.7

-7.0

Gross reversionary potential

Over-renting

Net reversionary potential

25.1

22.2

(1) Excludes voids and rent free periods

  1. As at 30 September 2020, Queen Anne's Gate (QAG), SW1 accounted for 93% of the Offices like-for-likeover-renting. Excluding QAG, the Offices segment and Combined Portfolio would be 7.4% and 0.5% net reversionary, respectively
  2. Retail is London retail, shopping centres and shops, outlets, Urban opportunities (excluding North Leisure Retail Park) and retail parks

Landsec ─ Appendices

18

Reconciliation of cash rents and P&L rents to ERV

Central London

Regional retail

Urban opportunities

Subscale sectors

Total

£m

£m

£m

£m

£m

Annualised rental income (accounting basis)

309

158

25

81

573

Ground rent and SIC 15 adjustments

20

(3)

-

-

17

Annualised net rent (cash basis)

329

155

25

81

590

Additional cash rent from unexpired rent free periods

5

2

1

3

11

Gross reversion from rent reviews in next five years

3

9

1

3

16

Net reversion on breaks and expiries in the next five years

6

(10)

(1)

(5)

(10)

Net reversion from rent reviews, breaks and expiries outside of the next five years

(15)

(10)

(1)

(4)

(30)

Development programme

74

-

-

-

74

Proposed developments (1)

-

-

-

-

-

Voids and tenants in administration (2)

7

15

2

4

28

Short-term income

9

6

1

21

37

Other

4

(1)

-

-

3

Net ERV

422

166

28

103

719

Ground rents payable

6

8

-

1

15

Gross ERV

428

174

28

104

734

  1. Proposed development ERVs represent the existing value in use rather than the proposed scheme ERV
  2. Excludes tenants in administration where the administrator continues to pay rent

Landsec ─ Appendices

19

Combined Portfolio - lease maturities (expiries and break clauses)

Excluding development programme

As at 30 September 2020

% of portfolio rental income

Central London

Regional retail

Urban opportunities

Subscale sectors

12

11.2

10.5

10

9.9

8

7.2

7.2

6.7

6

4

2

0

Holding over/2021

2022

2023

2024

2025

2026

Central

London

1.5

2.4

5.0

3.6

1.7

5.4

  • offices

Retail(1)

5.1

4.5

5.6

6.1

4.6

4.2

(1) Retail is London retail, shopping centres and shops, outlets, Urban opportunities (excluding North Leisure Retail Park) and retail parks

Landsec ─ Appendices

20

Retail sales and footfall

Footfall and sales growth/decline (26 weeks to 4th October 20 vs 26 weeks to 6th October 2019)

YTD

July -

YTD

July -

6-month

April -

September

April -

September

relative

Landsec

September

(post re-opening)

Benchmarks

September

(post re-opening)

performance

Footfall

-62.6%

-39.2%

UK footfall(1)

-59.2%

-39.9%

Same centre sales(2)

-56.7%

-28.3%

BRC non-food

-29.6%

-12.3%

-271bps

Same centre sales excluding Tesla

-56.0%

-26.3%

in-store total(3)

Same store sales(5)

-24.8%

-22.9%

BRC non-foodin-store LFL(3)

-10.4%

-9.5%

-144bps

Same centre stores excluding Tesla

-23.0%

-20.8%

BRC non-food all retail(4)

-5.9%

3.2%

Source: Landsec, unless specified below, data is exclusive of VAT and for the 26/13 week figures above, based on over 1,800 tenancies where the occupiers provide Landsec with turnover data (1a) ShopperTrak UK national benchmark, (1b) ShopperTrak Malls and Outlets index based on more than 300 UK Malls

  1. Landsec same centre total sales. Based on all store sales and takes into account new stores, new space and lost sales through lockdown.
  2. BRC - KPMG Retail Sales Monitor (RSM). Based on an average of quarterly non-food retail sales growth for physical i.e. bricks and mortar stores only (does not include online sales)
  3. BRC - KPMG Retail Sales Monitor (RSM). Based on an average of quarterly non-food retail sales growth including online sales
  4. Landsec same store/same tenant like-for-like sales only includes sales for tenants that were open and trading throughout the period

Landsec ─ Appendices

21

Top retail and leisure occupiers by percentage of Group rent

Brand

Status

Number

Group

of units

rent

Cineworld

13

1.9%

Boots

21

1.7%

Sainsbury's

14

1.5%

Next

15

1.1%

M&S(1)

14

1.1%

H&M

17

1.0%

Vue

6

1.0%

Tesco

9

0.8%

Primark

7

0.8%

Nando's

29

0.6%

Superdrug/Perfume Shop

22

0.5%

The Restaurant Group(2)

CVA & Admin.

50

0.5%

Curry's/PC World

8

0.5%

John Lewis Partnership(3)

7

0.5%

River Island

7

0.5%

Brand

Status

Number

Group

of units

rent

J C Decaux

20

0.4%

Clarks

12

0.4%

Odeon

6

0.4%

Arcadia

CVA

10

0.4%

Victoria's Secret

Administration

6

0.4%

VF Corporation

19

0.4%

Gap

13

0.4%

Superdry

7

0.4%

Signet Group

18

0.4%

Snozone

3

0.3%

Morrison's

3

0.3%

Costa Coffee

25

0.3%

JD Sports

9

0.3%

B & M Retail

6

0.3%

EE Limited

12

0.3%

  1. Includes M&S Simply Food store
  2. Includes Wagamama who are not party to the current CVA. Chiquitos, part of The Restaurant Group, is in administration
  3. Includes Waitrose & Partners Stores

Landsec ─ Appendices

22

Company voluntary arrangements (CVA)

Voting rights

Landlord lease categories

  • Creditors are entitled to vote for the full amount of their outstanding debt as at the date of the creditors meeting
  • A landlord's claim will comprise of amounts due for:
    • Arrears of rent, service charges and insurance - admitted at 100% of the outstanding value
    • Future rent, service charge and insurance up to the earlier of the first lease break or contractual end of the lease; and
    • An amount in respect of dilapidations
    • As the future occupational costs and dilapidations are an unliquidated claim and cannot be substantiated by the chairman of the creditors meeting, to enable them to be admitted for a "meaningful" vote, these are generally subject to a 75% discount
  • The company proposing the CVA will employ a property agent to assist it in grouping the leases into different categories which form the basis of the varying degrees of rental compromises across its leasehold portfolio
  • A typical CVA will have four categories, these being the following:
    • Category 1 - The most profitable stores (and their core portfolio) which require no rental reduction
    • Category 2 - Marginal stores that only require a small rental reduction (normally 25% of current passing rent) for them to return to profit
    • Category 3 - Stores that with a larger reduction in rent (normally 50% of current passing rent) will return to profitability
    • Category 4 - Stores that even with a large rent reduction will not return to profitability and therefore will close
  • Following the end of the compromise period those leases that have been subject to a rental reduction under the terms of the CVA will have their annual rent reset to the higher of the compromise rent or the market rent at that time

Landsec ─ Appendices

23

CVA/Administration exposure by occupier

As at 30 September 2020

Brand

Status

Number of

Group

units trading

rent

Arcadia Group

CVA

10

0.4%

Victoria's Secret UK

Administration

6

0.4%

Debenhams

Administration

4

0.2%

New Look

CVA

9

0.2%

Azzurri

Administration

10

0.2%

Casual Dining Group

Administration

23

0.2%

The Restaurant Group

CVA/Administration(1)

26

0.2%

Carpetright

CVA

4

0.1%

Pizza Express

CVA

16

0.1%

Homebase Ltd

CVA

1

0.1%

Travelodge

CVA

3

0.1%

Monsoon Accessorize

Administration

7

0.1%

Brand

Status

Number of

Group

units trading

rent

All Saints

CVA

5

0.1%

Carluccio's

Administration

3

0.1%

Paperchase

CVA

8

0.1%

Quiz

Administration

5

0.1%

Côte

Administration

3

<0.1%

Gala Bingo

CVA

2

<0.1%

Yo! Sushi

CVA

4

<0.1%

Regis

Administration

5

<0.1%

BMB Clothing

CVA

6

<0.1%

Clintons

Administration

3

<0.1%

Others

CVA/Administration

69

0.3%

Units trading in

232

3.3%

CVA/Administration

(1) Excludes Wagamama who are not party to the current CVA. Chiquitos, part of The Restaurant Group, is in administration

Landsec ─ Appendices

24

Summary of retail and leisure units in CVA/administration

Analysis by annualised rental income

New events in period

Administration

CVA

Six months ended 30 September 2020

ARI entering

Reduction in ARI from

ARI after impact of

CVA/administration

% of Group ARI

CVA/administrations

CVA/administrations

Number of units

Number of units trading

in the period

as at 31.03.20

in the period

in the period

impacted

as at 30.09.20

15.6

2.4%

(8.0)

7.6

138

73

15.5

2.4%

(10.3)

5.2

143

106

31.1

4.8%

(18.3)

12.8

281

179

Total CVAs/administrations

Administration

CVA

As at 30.09.20

Number of lettings agreed

Total ARI

on units previously in

in CVA/administration

Units

% of Group rent

CVA/administration

8.8

94

1.5%

12

9.8

138

1.7%

2

18.7

232

3.3%

14

Landsec ─ Appendices

25

Voids and units in administration

Like-for-like portfolio

Voids

%

6.7

6.6

31 Mar 2020

7

6.1

6

30 Sep 2020

4.8

4.4

4.8

5

4

3.2

3.4

3

1.8

2.4

2.0

2.4

2.5

2

1.1

1

0.5

-

0

Offices

London

Other

Regional

Outlets

Urban

Subscale

TOTAL

retail

central London

shopping centres

opportunities

sectors

PORTFOLIO

and shops

Units in administration

%

31 Mar 2020

7

6.3

30 Sep 2020

6

5

3.5

4

3.0

2.9

3

2.5

2.0

2

0.9

0.9

0.8

1

-

-

0.1

-

-

0.4

0.4

0

Offices

London

Other

Regional

Outlets

Urban

Subscale

TOTAL

retail

central London

shopping centres

opportunities

sectors

PORTFOLIO

and shops

Like-for-like occupancy in the portfolio was 96.1% at 30 September 2020, 97.5% at 31 March 2020

Landsec ─ Appendices

26

Financial history

Adjusted diluted earnings per share and dividend per share

Pence

60.0

59.7

55.9

53.1

50.0

48.3

45.7

45.6

44.2

40.5

41.5

40.0

36.3

38.5

36.8

38.6

35.0

34.1

31.9

29.8

30.7

30.0

29.0

28.0

28.2

23.2

20.0

Mar 2010

Mar 2011

Mar 2012

Mar 2013

Mar 2014

Mar 2015

Mar 2016

Mar 2017

Mar 2018

Mar 2019

Mar 2020

Adjusted diluted EPS

Dividend per share

Landsec ─ Appendices

27

Cash flow and adjusted net debt(1)

£m

(3,926)

(3,940)

452

65

Opening adjusted

Net cash

Development/

Acquisitions

Disposals

Other

Adjusted

net debt

generated from

other capital

net debt at

31 March 2020

operations

expenditure

30 September 2020

(1) On a proportionate basis

Landsec ─ Appendices

28

Financial history

Adjusted diluted net assets per share and Group LTV

Pence

%

1,550

45

1,400

1,434

1,408

1,417

1,432

1,422

1,411

1,250

1,293

1,367

1,348

1,305

40

1,100

1,129

1,192

1,079

950

1,013

35

937

800

826

863

863

864

903

30

737

650

691

500

25

350

200

20

Mar

Sept

Mar

Sept

Mar

Sept

Mar

Sept

Mar

Sept

Mar

Sept

Mar

Sept

Mar

Sept

Mar

Sept

Mar

Sept

Mar

Sept

2010

2010

2011

2011

2012

2012

2013

2013

2014

2014

2015

2015

2016

2016

2017

2017

2018

2018

2019

2019

2020

2020

Adjusted diluted net assets per share (LHS)(1)

Group LTV (RHS)(2)

  1. March 2018 onwards represents EPRA net tangible assets
  2. On a proportionate basis

Landsec ─ Appendices

29

Expected debt maturities (nominal)

Year(s) ending 31 March

£m 3,000

2,500

2,000

1,555

1,500

1,000

500

1,035

1,000

810

427

131

0

125

2021

2022

2023

2024

2025-29

2030-34

2035+

Undrawn bank facilities

Drawn bank debt/Commercial Paper (1)

Bond debt

(1) Commercial Paper maturity date refers to the maturity date of bank facility which is reserved against it

Landsec ─ Appendices

30

Financing

Significant headroom and a favourable debt structure

  • Security Group has a tiered covenant structure. We can borrow with limited operating restrictions up to 65% LTV and whilst ICR is greater than 1.45x
  • To allow for a shock to either metric, we can continue to borrow up to 80% LTV (if ICR remains above 1.45x) and we can continue to borrow whilst ICR is greater than 1.2x (if LTV remains below 65%)
  • Using September 2020 valuation numbers, we can withstand a valuation fall of 56% or a Security Group EDITDA reduction of £307m before our LTV or ICR covenants enter Final Tier 3 and prevent further bank drawings

Tiered covenant

LTV %

ICR X

Tier 1

≤55

≥1.85

Tier 2

56-65

≥1.45

Initial Tier 3

66-80

≥1.2

Operating environment - key points

Few operational restrictions

Liquidity facility required for senior interest payments

Debt to be amortised

Property manager appointed to make property recommendations below ICR 1.25x

Final Tier 3

>80

≥1.0

Property manager recommendations to be followed in all material respects

Administrative receiver could be appointed purely to sell assets (>85% LTV)

Default

>100

<1.0

Default which allows the secured creditors to instruct the Trustee to enforce security

and if appropriate accelerate

Landsec ─ Appendices

31

The Security Group

Summary

Our Security Group funding arrangements provide flexibility to buy and sell assets, develop a significant pipeline and raise debt via a wide range of sources. This is subject to covenant tiering which progressively increases operational restrictions in response to higher gearing levels or lower interest cover.

Covenant tiering

Valuation

Incremental

tolerance

debt from

Operating

Key

from current

current position

Tier

restrictions

position

£bn

Tier 1

Minimal restrictions

Current

Current

Tier 2

Additional liquidity

-36%

+2.2

facilities

Initial Tier 3

Payment restrictions

-46%

+3.4

Debt amortisation

Final Tier 3

Disposals to pay down

-56%

+5.1

debt

Potential appointment

of property manager

Control framework

  • There are covenants to protect security effectiveness, limit portfolio concentration risk and control churn of the portfolio
  • The structure, which is overseen by a Trustee, is designed to flex with the business and broadly the covenants can be altered in three ways(1)
    • Trustee discretion - if the change is not materially prejudicial to the interests of the most senior class of debt holders
    • Rating affirmation - that the change will not lead to a credit rating downgrade
    • Lender consent
  • An example of how sector and regional concentration limits have changed to reflect the shape of the business is shown on the next slide

(1) Please refer to our most recent Base Prospectus (which is on our website) for full details of the Security Group's terms and conditions

Landsec ─ Appendices

The Security Group

Portfolio concentration limits

32

30 September 2012

Sector concentration (% of collateral value)

Office

Shopping centres and shops

Retail warehouses

Industrial

Residential

Leisure and hotels

Other

Regional concentration (% of collateral value)

London

Rest of South East and Eastern

Midlands

North

Wales and South West

Scotland and Northern Ireland

Non-UK

£bn

3.9

3.0

1.1

-

0.1

-

0.8

£bn

5.5

1.0

0.2

1.2

0.5

0.5

-

%

Maximum permitted

%

44

60

33

60

13

55

1

35

1

35

-

-

8

15

%

Maximum permitted

%

62

75

11

40

3

40

13

40

5

40

6

40

-

5

30 September 2020

Sector concentration

£bn

%

Maximum permitted

Acquisition headroom

(% of collateral value)

%

£bn

Office

6.2

56

85

22

Shopping centres and shops

3.6

32

100

n/a

Retail warehouses

0.4

4

55

13

Industrial

-

-

20

3

Residential

-

-

20

3

Leisure and hotels

1.0

8

25

2

Other

-

-

15

2

Regional concentration

£bn

%

Maximum permitted

Acquisition headroom

(% of collateral value)

%

£bn

London

8.1

72

100

n/a

Rest of South East and Eastern

1.6

15

70

21

Midlands

0.1

1

40

7

North

0.8

7

40

6

Wales and South West

0.3

3

40

7

Scotland and Northern Ireland

0.3

2

40

7

Non-UK

-

-

5

1

Portfolio concentration limits have been amended over time to reflect the changing shape of the business.

Landsec ─ Appendices

Office-led development programme returns

33

Status

Estimated completion date

Description of use

Landsec ownership

%

Size

Sq ft

(000)

Letting status

%

Market value

£m

Net income/ERV

£m

Total development cost (TDC)

£m

to date

Forecast TDC

£m

Gross yield on cost(1)

%

Valuation surplus/(deficit) to date

£m

Market value + outstanding TDC

£m

Gross yield on market value

%

+ outstanding TDC

(1) Based on ERV to the nearest £0.1m

21 Moorfields, EC2

Fully committed; pre-let

June 2022

Office - 100%

100

564

100

471

38

326

576

6.5

141

721

5.2

The Forge, SE1

Fully committed; speculative

June 2022

Office - 100%

100

140

-

51

10

48

140

6.8

4

143

6.6

Lucent, W1

Fully committed; speculative

December 2022

Office - 77%

Retail - 21%

Residential - 2%

100

144

-

89

14

115

241

5.6

(26)

215

6.3

n2, SW1

Completing the core;

speculative; main contract

works paused

January 2024

Office - 100%

100

166

-

26

13

40

206

6.3

(13)

192

6.7

Landsec ─ Appendices

Pipeline of office-led development opportunities

34

Status

Earliest start date

Earliest completion date

Description of use

Landsec ownership

%

Current annualised rental income

£m

Current size

Sq ft

(000)

Proposed size

Sq ft

(000)

Market value at 30 September 2020

Outstanding total development costs

Indicative total development cost

Portland House, SW1

Planning consent granted

April 2021

November 2024

Office - 90%

Retail - 10%

100

-

310

400

£m

192

238

430

Timber Square, SE1

Planning application submitted

March 2021

November 2023

Office - 96%

Retail - 4%

100

-

141

380

£m

85

295

380

Red Lion Court, SE1

Progressing design

October 2021

September 2024

Office - 97%

Retail - 3%

100

5

128

237

Landsec ─ Appendices

35

Pipeline of Urban opportunities

Status

Shepherd's Bush, W12

Stage 2 design

Finchley Road, NW3

Masterplanning

The Lewisham Centre, SE13

Site assembly and

masterplanning

Southside, SW18

Masterplanning

Great North Leisure Park, N12

Feasibility study

Current use

Indicative use

Earliest completion

Retail, leisure,

Landsec

Retail

hotels and

Earliest

ownership

and leisure

Number

Office

other

start

%

Sq ft (000)

of homes

Sq ft (000)

Sq ft (000)

on site

Phase 1

Masterplan

100

302

650

100

355

2023

2025

2027

100

310

1,800

50

100

2023

2026

2036

100

330

1,799

225

112

2024

2026

2037

50

600

2,035

-

354

2024

2026

2036

100

90

830

-

53

2024

2026

2029

Landsec ─ Appendices

36

Committed capital expenditure

  • £512m committed capex across six schemes plus Portland House
  • Disposals to fund capex

Committed development capex by scheme

£m 300

250

200

150

100

50

0

H2 21

2022

2023

2024

2025

21 Moorfields

Lucent

n2 - uncommitted

n2 - committed(1)

The Forge

Castle Lane

Wardour Street

Portland House

(1) £21m of committed capex at n2 to complete the core

Landsec ─ Appendices

37

Property/gilt yield spread

The yield spread is at record high in the current low-gilt environment

%

14

12

10

8

6

4

2

0

-2

-4

-6

Spread

Property EY

10-year gilt

Sep 20

Mar 20

Sep 19

Mar 19

Sep 18

Mar 18

Sep 17

Mar 17

Sep 16

Mar 16

Sep 15

Mar 15

Sep 14

Mar 14

Sep 13

Mar 13

Sep 12

Mar 12

Sep 11

Mar 11

Sep 10

Mar 10

Sep 09

Mar 09

Sep 08

Mar 08

Sep 07

Mar 07

Sep 06

Mar 06

Sep 05

Mar 05

Sep 04

Mar 04

Sep 03

Mar 03

Sep 02

Mar 02

Sep 01

Mar 01

Sep 00

Mar 00

Sep 99

Mar 99

Sep 98

Mar 98

Sep 97

Mar 97

Sep 96

Mar 96

Sep 95

Mar 95

Sep 94

Mar 94

Sep 93

Mar 93

Sep 92

Mar 92

Sep 91

Mar 91

Sep 90

Mar 90

Sep 89

Mar 89

Source: Bloomberg, MSCI Monthly Index All Property

Landsec ─ Appendices

38

Central London investment market

2020 transaction levels, so far, were down 45% on the corresponding period in 2019; overseas investors represented 73% of all investments

Investment volumes

Office capital inflow by region

£bn

UK

Rest of Europe

Asia

Germany

Middle East / North Africa

US / Canada

25

100%

Other overseas

20

90%

80%

15

70%

60%

10

50%

40%

Q4

30%

5

Q3

20%

Q2

10%

Q1

0

0%

1990

1995

2000

2005

2010

2015

2020

1984-

1990-

2000-

2010-

2013- 2016 2017 2018

2019

Q1-Q3

1989

99

09

12

15

2020

Source: CBRE; shows calendar years

Landsec ─ Appendices

39

Central London quarterly take-up

Take-up of new space since March '20 represented 48% of total take-up; ahead of the

long-term average

m sq ft 6

5

4

3

2

1

0

Q3 2010

Q4 2010

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

Q3 2012

Q4 2012

Q1 2013

Q2 2013

Q3 2013

Q4 2013

Q1 2014

Q2 2014

Q3 2014

Q4 2014

Q1 2015

Q2 2015

Q3 2015

Q4 2015

Q1 2016

Q2 2016

Q3 2016

Q4 2016

Q1 2017

Q2 2017

Q3 2017

Q4 2017

Q1 2018

Q2 2018

Q3 2018

Q4 2018

Q1 2019

Q2 2019

Q3 2019

Q4 2019

Q1 2020

Q2 2020

Q3 2020

Secondhand

New completed

Pre-let

Source: CBRE

(1) New space here is defined as newly-completed and pre-let

Landsec ─ Appendices

40

Central London rolling 12-monthtake-up

Rolling annual take-up was 8.4m sq ft as of Q3 2020; 35% below the long-term average

m sq ft 16

14

12

10

8

6

4

2

0

2008 Q3

2008 Q4

2009 Q1

2009 Q2

2009 Q3

2009 Q4

2010 Q1

2010 Q2

2010 Q3

2010 Q4

2011 Q1

2011 Q2

2011 Q3

2011 Q4

2012 Q1

2012 Q2

2012 Q3

2012 Q4

2013 Q1

2013 Q2

2013 Q3

2013 Q4

2014 Q1

2014 Q2

2014 Q3

2014 Q4

2015 Q1

2015 Q2

2015 Q3

2015 Q4

2016 Q1

2016 Q2

2016 Q3

2016 Q4

2017 Q1

2017 Q2

2017 Q3

2017 Q4

2018 Q1

2018 Q2

2018 Q3

2018 Q4

2019 Q1

2019 Q2

2019 Q3

2019 Q4

2020 Q1

2020 Q2

2020 Q3

Secondhand

New completed

Pre-let

Serviced office

10-year average

Source: CBRE

Landsec ─ Appendices

41

Central London availability and vacancy rate

Availability increased by c.45% since March '20 pushing the vacancy rate to 6.5%

compared to the long-term average of 4.2%

m sq ft

%

35

16

30

14

25

12

20

10

8

15

6.5%

6

10

4

5

2

0

Q3 2007

Q1 2009

Q3 2010

0

Q1 1991

Q3 1991

Q1 1992

Q3 1992

Q1 1993

Q3 1993

Q1 1994

Q3 1994

Q1 1995

Q3 1995

Q1 1996

Q3 1996

Q1 1997

Q3 1997

Q1 1998

Q3 1998

Q1 1999

Q3 1999

Q1 2000

Q3 2000

Q1 2001

Q3 2001

Q1 2002

Q3 2002

Q1 2003

Q3 2003

Q1 2004

Q3 2004

Q1 2005

Q3 2005

Q1 2006

Q3 2006

Q1 2007

Q1 2008

Q3 2008

Q3 2009

Q1 2010

Q1 2011

Q3 2011

Q1 2012

Q3 2012

Q1 2013

Q3 2013

Q1 2014

Q3 2014

Q1 2015

Q3 2015

Q1 2016

Q3 2016

Q1 2017

Q3 2017

Q1 2018

Q3 2018

Q1 2019

Q3 2019

Q1 2020

Q3 2020

Availability

Rolling annual total take-up excluding pre-let

Vacancy rate (RHS)

Source: CBRE, MSCI Monthly Index

  1. Availability represents the total net lettable floor space in existing properties, which is being actively marketed, either for lease, sublease, and assignment or for sale for owner occupation as at the end of the survey period. Availability includes space that is being marketed and is physically vacant or occupied. Space that is physically vacant, but not being marketed or is not available for occupation is excluded from availability.
    Space that is Under Construction and will become ready to occupy within 12 months is included within availability

Landsec ─ Appendices

42

Central London secondhand supply vs rental value growth

The increase in overall availability was driven by an increase in secondhand space;

47% rise since March '20

m sq ft

Rental value growth %

20

30

18

20

16

14

10

12

0

10

8

-10

6

-20

4

2

-30

0

Q3 1999

Q1 2012

-40

Q1 1991

Q3 1991

Q1 1992

Q3 1992

Q1 1993

Q3 1993

Q1 1994

Q3 1994

Q1 1995

Q3 1995

Q1 1996

Q3 1996

Q1 1997

Q3 1997

Q1 1998

Q3 1998

Q1 1999

Q1 2000

Q3 2000

Q1 2001

Q3 2001

Q1 2002

Q3 2002

Q1 2003

Q3 2003

Q1 2004

Q3 2004

Q1 2005

Q3 2005

Q1 2006

Q3 2006

Q1 2007

Q3 2007

Q1 2008

Q3 2008

Q1 2009

Q3 2009

Q1 2010

Q3 2010

Q1 2011

Q3 2011

Q3 2012

Q1 2013

Q3 2013

Q1 2014

Q3 2014

Q1 2015

Q3 2015

Q1 2016

Q3 2016

Q1 2017

Q3 2017

Q1 2018

Q3 2018

Q1 2019

Q3 2019

Q1 2020

Q3 2020

Availability - secondhand space

MSCI central London rental value growth (12m to quarter)

Source: CBRE, MSCI Monthly Index

  1. Secondhand space is space which is being marketed having been previously occupied in its current state. Current state can include a minor re-decoration, but not a comprehensive refurbishment
  2. Availability represents the total net lettable floor space in existing properties, which is being actively marketed, either for lease, sublease, and assignment or for sale for owner occupation as at the end of the survey period. Availability includes space that is being marketed and is physically vacant or occupied. Space that is physically vacant, but not being marketed or is not available for occupation is excluded from availability.
    Space that is Under Construction and will become ready to occupy within 12 months is included within availability

Landsec ─ Appendices

43

London Office market availability - grade A vs second hand space

The majority of availability in London is second hand space with the proportions between prime and secondary continuing to diverge, indicating a bifurcation of the market

Proportion of total 80%

74%

70%

60%

50%

50%

40%

30%

26%

20%

10%

0%

Q2 2008

Q3 2008

Q4 2008

Q1 2009

Q2 2009

Q3 2009

Q4 2009

Q1 2010

Q2 2010

Q3 2010

Q4 2010

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

Q3 2012

Q4 2012

Q1 2013

Q2 2013

Q3 2013

Q4 2013

Q1 2014

Q2 2014

Q3 2014

Q4 2014

Q1 2015

Q2 2015

Q3 2015

Q4 2015

Q1 2016

Q2 2016

Q3 2016

Q4 2016

Q1 2017

Q2 2017

Q3 2017

Q4 2017

Q1 2018

Q2 2018

Q3 2018

Q4 2018

Q1 2019

Q2 2019

Q3 2019

Q4 2019

Q1 2020

Q2 2020

Q3 2020

Share of grade A space

Share of secondhand space

Source: CBRE

(1) Grade A space here is defined as newly-completed space and space that is under construction and will become ready to occupy within 12 months

Landsec ─ Appendices

44

Central London supply as at 30 September 2020

14.6m sq ft currently under construction and a further 17m sq ft could complete by 2024

m sq ft

Vacancy rate %

18

16

16

14

14

12

12

10

10

6.5%

8

8

6

6

4

4

2

2

0

1993

2004

2015

0

1984

1985

1986

1987

1988

1989

1990

1991

1992

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2016

2017

2018

2019

2020

2021

2022

2023

2024

Completed

Under construction

Definite/Likely

Average completions (1984-2019)

(RHS) Vacancy rate (all grades)

Source: CBRE, Knight Frank, Landsec; shows calendar years

  1. Completions/under construction includes fringe (White City, Non-Core Docklands, Stratford, Nine Elms, Hammersmith). Vacancy rate as at September 2020. From 2017, supply pipeline monitors schemes above 20,000 sq ft
  2. Landsec estimated future supply based on data from CBRE and Knight Frank
  3. "Definite/likely" are proposed schemes where it is reasonable to expect delivery in that year based on, inter alia: planning, pre-let, funding, vacant possession, demolition, construction contract
  4. Grade A space is brand new or comprehensively refurbished space, with high specification and prominent market image
  5. Vacancy rate is expressed as vacant space as a percentage of total stock
  6. Total stock represents the total completed space (occupied and vacant) in the private and public sector recorded as the net lettable area

Landsec ─ Appendices

45

Central London supply as at 30 September 2020

Between March and September 2020, the total pipeline for the

forecast period remained stable but new construction starts

reduced by c.46% compared to the same period in 2019 -

46% of space under construction is already pre-let

demonstrating the potential for current market uncertainty to

as flight to quality continues

delay completions

Under construction pipeline split into pre-let and speculative

Speculative pipeline only

m sq ft

Vacancy rate %

m sq ft

Vacancy rate %

12

c.46% of space

10

12

Continued caution over construction

10

under construction is pre-let

starts could impact completion timing

10

10

6.5%

8

8

8

8

6.5%

6

6

6

6

4

4

4

4

2

2

2

2

0

0

0

0

2017

2018

2019

2020

2021

2022

2023

2024

2017

2018

2019

2020

2021

2022

2023

2024

Completed

U/C pre-let

U/C speculative

Definite/Likely

Average speculative completions

Average completions

Vacancy rate (RHS)

(2010-2019)

(1984-2019)

(all grades)

Source: CBRE, Knight Frank, Landsec; shows calendar years

  1. Completions/under construction includes fringe (White City, Non-Core Docklands, Stratford, Nine Elms, Hammersmith). Vacancy rate as at September 2020. From 2017, supply pipeline monitors schemes above 20,000 sq ft
  2. Landsec estimated future supply based on data from CBRE and Knight Frank
  3. "Definite/likely" are proposed schemes where it is reasonable to expect delivery in that year based on, inter alia: planning, pre-let, funding, vacant possession, demolition, construction contract
  4. Grade A space is brand new or comprehensively refurbished space, with high specification and prominent market image
  5. Vacancy rate is expressed as vacant space as a percentage of total stock
  6. Total stock represents the total completed space (occupied and vacant) in the private and public sector recorded as the net lettable area

Landsec ─ Appendices

46

Central London office market

Demand has broadly kept pace with supply over the last three years which has prevented

a cumulative build-up of new space. This coupled with the 'flight to quality' may limit any

rental decline

m sq ft

-55.9% rental growth

-25.1% rental growth

-25.0% rental growth

%

(-18.5% CAGR)

(-13.4% CAGR)

(-13.4% CAGR)

18

Forecast

36

16

In previous downturns, significant rental appreciations beforehand coupled with an

32

14

28

"unchecked" supply of space, exacerbated the rental decline during the respective crises

12

24

10

20

8

16

6

12

4

8

2

4

0

0

-2

-4

-4

-8

-6

-12

-8

-16

-10

-20

-12

131.5% rental growth

99.3% rental growth

39.8% rental

65.1% rental growth

-24

-14

-28

(18.3% CAGR)

(9.0% CAGR)

growth

(5.1% CAGR)

-16

-32

(8.7% CAGR)

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

Early 90's recession

Dotcom

GFC

Referendum

Transition period ends

New space take-up

Completions

Forecast speculative completions

Rental growth (RHS)

Source: CBRE, Knight Frank, MSCI Annual Index, Landsec; shows calendar years

  1. Landsec forecast based on data from CBRE and Knight Frank
  2. New space is defined as newly-completed and pre-let

Landsec ─ Appendices

Portfolio segmental split aligned to strategic priorities

47

Office

Retail

Specialist

Previous segments

West End

City

Mid-town

Southwark and other

London retail

Regional retail

Outlets

Retail parks

Leisure and hotels

Other

New segments

Offices

Central London portfolio

London retail

Other central London

Specialist

Regional shopping centres and shops

Regional retail

Outlets

Urban opportunities

Urban opportunities

Retail parks

LeisureSubscale sectors

Hotels

Strategic priorities

our central London

business

our Regional retail

business

through Urban opportunities

capital from Subscale

sectors

Landsec ─ Appendices

48

Important notice

This presentation may contain certain 'forward-looking' statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual outcomes and results may differ materially from any outcomes or results expressed or implied by such forward-looking statements.

Any forward-looking statements made by or on behalf of Landsec speak only as of the date they are made and no representation or warranty is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared.

Landsec does not undertake to update forward-looking statements to reflect any changes in Landsec's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.

Information contained in this presentation relating to Landsec or its share price, or the yield on its shares, should not be relied upon as an indicator of future performance.

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Land Securities Group plc published this content on 10 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 10 November 2020 08:52:05 UTC