British Land : Half Year Results 2020/21

Chris Grigg, CEO said: 'I am immensely proud of what we have achieved in my time at British Land. Today, despite the unprecedented situation brought about by Covid, our business is more financially resilient, our focus on mixed use London campuses is clear and we have an unrivalled pipeline of opportunities. We are closer to our customers and our expertise in creating and managing space that reflects their needs has never been more important. Under Simon's leadership the business is well placed to build on these advantages, navigate the short term challenges and thrive in the long term.'

Simon Carter, incoming CEO said: 'I take on the role of CEO at a unique time, but what I've seen since returning to British Land, especially over the last six months, reinforces my belief in the strength of our business and gives me confidence in the future.

The quality of our office business has been clearly demonstrated, with rent collection of 97% and occupancy of 95%. Many of our customers have seen that their people can work more flexibly, but they are clear that great office space, such as we deliver at our mixed use campuses, will continue to play a crucial role in their success, by promoting innovation, collaboration, training and culture. Investors are increasingly taking a similar long term perspective, looking through Covid, to acquire prime London offices at pricing close to pre-pandemic levels.

Our first half results naturally reflect the challenges in retail. Against this backdrop, we remain focused on active asset management, working to maximise rent collection and keeping our units occupied with successful retailers. There is a clear preference from shoppers and retailers for out of town, open air retail parks. Our approach and attractive asset mix means that prior to the November lockdown, we were delivering significant outperformance on footfall and retailer sales and a steady improvement in rent collection levels.

We remain thoughtful and active in terms of capital allocation, executing £675m of sales since April, enhancing the strength and resilience of our balance sheet. We have also resumed the dividend on the basis of a fixed percentage payout of underlying earnings to provide maximum strategic and financial flexibility.

Going forward, we have four clear priorities for our business: realising the potential of mixed use; progressing value accretive development; addressing the challenges in retail; and active capital recycling.'

Performance summary

• Financial performance: reflecting the impact of Covid-19
  • Underlying EPS reduced 34.8% primarily reflecting an increase in provisions for rent receivables
  • Portfolio value down 7.3%; Offices down 3.1%; Retail down 14.9%; Developments broadly flat
  • EPRA Net Tangible Assets (NTA) reduced 10.3% to 693p

• Strong and flexible balance sheet, dividend resumed
  • £456m retail assets sold since April 2020, 6.7% ahead of book value
  • £219m of standalone offices sold in November, including Clarges Mayfair for £177m (which was 7.6% ahead of book value)
  • £1bn undrawn facilities and cash with no requirement to refinance until 2024
  • LTV at 35.7%; 42% headroom to Group debt covenants
  • Interim dividend of 8.4p per share, representing 80% of underlying EPS
  • Fitch Ratings affirmed unsecured credit rating at 'A'

• Continued strong performance on Sustainability benchmarks
  • 100 Liverpool Street completed, with embodied carbon under 400 kg CO₂e per m², ahead of 2030 targets
  • GRESB 4* and awarded a green star rating for the 10th consecutive year
  • AAA MSCI rating, ranking within the top 9% overall

Strategic priorities

We will remain focused on enhancing our core mixed use, London business. We have four clear priorities:

• Realising the potential of mixed use:
  • Offices portfolio 95% occupied; 65,000 sq ft of deals greater than one year; lettings and renewals on the standing portfolio 9% ahead of ERV
  • Under offer on 313,000 sq ft of leasing and in negotiation on a further 361,000 sq ft
  • Recently completed and committed developments 57% pre-let (89% ex. Norton Folgate); generating £65m of future rent when 100 Liverpool Street, 1 Triton Square and Norton Folgate are fully let
  • 97% of September quarter office rent collected
  • Storey operational across 325,000 sq ft; first stand-alone location launched at Haggerston

• Progressing value accretive development
  • Commitment to develop 336,000 sq ft mixed use scheme at Norton Folgate, adjacent to Broadgate
  • Secured planning for our 53 acre scheme at Canada Water; headlease drawdown expected end 2020
  • Commenced enabling works for first phase of our Canada Water masterplan

• Addressing the challenges in retail
  • All retail assets open, 86% of stores open prior to regional restrictions and the November lockdown
  • Portfolio 95% occupied; 161,000 sq ft of deals greater than one year; 11% below previous passing rent
  • 278,000 sq ft of short and temporary deals
  • Footfall in September and October 82% of the same period last year; retailer sales 85% of last year
  • 48% of retail assets are open air retail parks: significantly outperforming benchmarks
  • 62% of September quarter rent collected

• Active capital recycling
  • £2.1bn assets sold since 2018, including £1.2bn in retail
  • Innovative transactions including superstore carve outs at retail centres
  • Reinvesting proceeds into development opportunities including Norton Folgate and Canada Water

Summary performance

	HY 2019/20	HY 2020/21	Change
Income statement
Underlying earnings per share2	16.1p	10.5p	(34.8)%
Underlying Profit	£152m	£107m	(29.6)%
IFRS (loss) after tax	£(404)m	£(730)m
IFRS basic earnings per share	(42.9)p	(78.7)p
Dividend per share	15.97p	8.40p
Total accounting return2	(3.7)%	(10.3)%
Balance sheet	31 Mar 2020	30 Sept 2020
Portfolio at valuation (proportionally consolidated)	£11,157m	£10,315m	(7.3)%1
EPRA Net Tangible Assets per share2	773p	693p	(10.3)%
IFRS net assets	£7,147m	£6,373m
Loan to value ratio (proportionally consolidated)	34.0%	35.7%
Operational Statistics	HY 2019/20	HY 2020/21
Lettings and renewals over 1 year	0.8m sq ft	0.2m sq ft
Total lettings and renewals	1.2m sq ft	0.6m sq ft
Gross investment activity	£0.5bn	£0.6bn
Committed and recently completed development	1.6m sq ft	1.2m sq ft
Sustainability Performance
MSCI ESG	AAA rating	AAA rating
GRESB	4* and Green Star	4* and Green Star

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

Results Presentation Conference Call

A presentation of the results will be broadcast via conference call and slides to accompany the call will be displayed along with a live audio broadcast via the website (Britishland.com) at 8.30am on 18 November 2020. The details for the conference call and weblink are as follows:

UK Toll Free Number:	0800 640 6441
Access code:	194307
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 3936 3001
Passcode:	345194
The accompanying slides will be made available at britishland.com just prior to the event starting.

For Information Contact

Investor Relations
David Walker, British Land	07753 928382
Media
Charlotte Whitley, British Land	07887 802535
Guy Lamming/Gordon Simpson, Finsbury	020 7251 3801
	[e-mail]

Download the Full Press Release as a PDF ( 1.7 MB )
View the results webcast