British Land : Full Year Results 2021

Simon Carter, CEOsaid: 'This has been an extraordinary year so I am enormously proud of the resilient performance the team delivered, and the strong progress we have made across the priority areas I set out in November. Our new strategy exploits our competitive strengths in development, active management and repositioning assets and sees us invest behind two key themes, Campusesand Retail & Fulfilment. Our London campuses are already a successful differentiator for us, benefitting from increasing customer focus on the best space, where supply is most constrained. In Retail, we are expanding our approach to include fulfilment, building on our market leading position in high quality, out of town retail parks which already play a key role in retailers' fulfilment models, and complementing this with development led investment in urban logistics, primarily in London. We see a value opportunity in retail parks, reflecting increased yields and a more stable occupational outlook. We have been further encouraged by how strongly footfall and sales have rebounded in recent weeks. In urban logistics, our experience delivering complex developments in Central London means we are well placed to deliver innovative solutions to meet the accelerating occupational demand.

While Covid-19 has clearly impacted our performance, with the portfolio value down 10.8%, we have a strong balance sheet and have already delivered excellent progress against our four priorities. We've sold £1.2bn of assets, overall 6.2% ahead of book value, completed our first net zero development at 100 Liverpool Street and committed to develop Norton Folgate and 1 Broadgate, where we have pre let nearly 30% of the office space to JLL. We have made our first logistics acquisition in north London and acquired £197m of high quality retail parks. Operationally, we have driven rent collection and leasing activity, which at 1.7m sq ft in Retail was our highest ever. I would like to thank the whole team for their incredible efforts this year.

Looking forward, we will further align our business to growth and value, benefitting from the pick up in economic activity that is now emerging. On our Campuses, we have an opportunity to introduce innovative growth sectors including life sciences at Regent's Place. At Canada Water our planning permission is deliberately flexible, enabling us to deliver a range of uses aligned to growth and long term trends. In Retail & Fulfilment we will continue to target value opportunities in retail parks and development-led, logistics in London. We will maintain our focus on the everyday management of our spaces: driving rent collection, supporting our customers and making our space more sustainable.'

Performance summary

• Financial performance reflects the impact of Covid-19
  • Underlying profit reduced 34.3% primarily reflecting an increase in provisions for rent receivables
  • 83% of FY21 rent collected. 99% Offices; 71% Retail
  • Portfolio value down 10.8%; Offices down 3.8%, with moderate decline of 0.8% in the second half; Retail down 24.7% with the rate of decline slowing in Retail Parks; Developments broadly flat
  • EPRA Net Tangible Assets (NTA) reduced 16.3% to 648p

• Strong and flexible balance sheet
  • £556m retail assets sold since April 2020, 7.0% ahead of book value
  • £643m of standalone offices sold, 5.2% ahead of book value
  • £1.8bn undrawn facilities and cash with no requirement to refinance until early 2025
  • LTV down 200bps at 32%; 46% headroom to Group debt covenants
  • FY21 dividend of 15.04p per share, representing 80% of underlying EPS, in line with our new policy
  • Fitch Ratings affirmed unsecured credit rating at 'A'

• Encouraging performance on reopening
  • In the period since reopening, footfall and sales on our Retail portfolio were 88% and 104% of pre pandemic levels respectively; 100% and 109% for retail parks (all excluding F&B)

• Good progress against 2030 sustainability strategy
  • Delivered our first net zero carbon development at 100 Liverpool Street
  • Supported 364 people into employment at our places
  • GRESB 5* and awarded a green star rating for the 11th consecutive year
  • AAA MSCI rating, ranking within the top 11% overall

Progress against our priorities

• Realising the potential of our Campuses:
  • 168,000 sq ft of deals greater than one year in the period; lettings and renewals on the standing portfolio 2.3% ahead of ERV; occupancy at 94%
  • Total lettings and renewals at 395,000 sq ft; further 161,000 sq ft deals agreed post period end, including pre-let of 134,000 sq ft to JLL at 1 Broadgate; total leasing since 1 April 2020 of 556,000 sq ft
  • Recently completed and committed developments 50% pre-let; generating £85m of rent when fully let
  • Under offer and in negotiation on a further 474,000 sq ft
  • Storey operational across 348,000 sq ft; launched at 100 Liverpool Street
  • Completed headlease drawdown at Canada Water; signed TEDI-London, a higher education provider

• Progressing value accretive development
  • Commitment to develop 882,000 sq ft across 1 Broadgate and Norton Folgate
  • Commenced enabling works for the first phase of our Canada Water masterplan with main build contracts to be placed in the coming months

• Targeting the opportunities in Retail & Fulfilment
  • 962,000 sq ft of deals greater than one year; 19% below previous passing rent; occupancy at 94%
  • 737,000 sq ft of short and temporary deals, bringing total leasing to 1.7m sq ft, our highest ever
  • 583,000 sq ft under offer, 5.8% below March 2021 ERV and 29% below passing rent
  • First urban logistics acquisition: 216,000 sq ft warehouse in Enfield with development potential, acquired for £87m
  • Exploiting value opportunity in retail parks: commitment to acquire the outstanding interest in HUT based on a GAV of £148m and £49m acquisition of The A1 Retail Park in Biggleswade

• Active capital recycling
  • £1.2bn assets sold, including £556m retail sales and £643m offices sales
  • Reinvesting proceeds into value accretive acquisitions and development
  • £1.6bn financing, including facility extensions and new loans

Summary performance

Year ended 31 March	2020	2021	Change
Income statement
Underlying Profit	£306m	£201m	(34.3)%
Underlying earnings per share2	32.7p	18.8p	(42.5)%
IFRS (loss) after tax	£(1,114)m	£(1,083)m
IFRS basic earnings per share	(110.0)p	(111.2)p
Dividend per share	15.97p	15.04p
Total accounting return2	(11.0)%	(15.1)%
Balance sheet
Portfolio at valuation (proportionally consolidated)	£11,157m	£9,132m	(10.8)%1
EPRA Net Tangible Assets per share2	773p	648p	(16.3)%
IFRS net assets	£7,147m	£5,983m
Loan to value ratio (proportionally consolidated)	34.0%	32.0%
Operational Statistics
Lettings and renewals over 1 year	1.6m sq ft	1.2m sq ft
Total lettings and renewals	2.3m sq ft	2.2m sq ft
Gross investment activity	£0.9bn	£1.7bn
Committed and recently completed development	1.6m sq ft	1.8m sq ft
Sustainability Performance
MSCI ESG	AAA rating	AAA rating
GRESB	4* and Green Star	5* and Green Star

¹ Valuation movement during the year (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 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 an audio broadcast via the website (Britishland.com) at 8.30am on 26 May 2021. The details for the conference call and weblink are as follows:

UK Toll Free Number:	0800 640 6441
Access code:	146721
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:	218463
The accompanying slides will be made available at britishland.com just prior to the event starting.

For Information Contact

Investors
David Walker, British Land	07753 928382
Joanna Waddingham, British Land	07714 901166
Media
Charlotte Whitley, British Land	07887 802535
Guy Lamming/Gordon Simpson, Finsbury	020 7251 3801 [e-mail]

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