The British Land Company PLC Half Year Results
Chris Grigg, Chief Executive said:
“Our operational performance has been good and we made further progress on our mixed use strategy, including a resolution to grant planning for a new urban centre at Canada Water in London. We continue to deliver space that our customers want, with 1.3m sq ft of leasing activity across existing and new space, so occupancy remains high at 97% and developments are now 87% pre let or under offer generating £63m of rent when fully let. In a tough market, we have capitalised on opportunities to make retail sales, disposing of £236m of assets ahead of book value.
Looking forward, we expect our markets to remain uneven, but we have kept debt levels low, our balance sheet is strong and flexible and we have a broad spread of expertise across our business. We expect retail to remain challenging, so we'll focus on driving operational performance and maintaining occupancy. We see early signs that some liquidity may be returning to parts of the market, and our focus will remain on thoughtfully progressing our strategy to reduce exposure. In London, we expect the market to remain good, with supply relatively constrained and high quality space, in well-connected, vibrant parts of town continuing to attract demand from a range of businesses. These dynamics are highly supportive of our Campus approach.”
Financial summary
- Financial performance
- Underlying EPS down 6.4% to 16.1p following £1.2bn of income producing sales since April 2018, partially mitigated by buybacks contributing 0.5p
- Development programme will add 4.6p to annualised EPS when fully let
- Portfolio value down 4.3%; Retail down 10.7%, Offices up 0.4% and developments up 4.6%
- EPRA NAV down 5.4% at 856p due to valuation declines, with buybacks contributing positive 8p
- Half year dividend up 3.0% at 15.97p; total accounting return -3.7%
- Strong and flexible balance sheet
- £289m of asset sales, including £194m superstore portfolio, overall ahead of book value
- £125m share buyback completed, bringing cumulative buyback to £625m since July 2017
- Maintained low LTV at 30.8% (March 2019: 28.1%), weighted average interest rate reduced to 2.7%
Progress on strategy: Becoming the specialist in mixed use
- Campus-focused London Offices: A compelling, customer-focused offer
- 671,000 sq ft of leasing activity representing £29m of headline rents; 97% occupancy
- Under offer on a further 74,000 sq ft and in negotiations on a further 242,000 sq ft
- Lettings and renewals on the investment portfolio overall 11% ahead of ERV
- Committed developments 87% pre-let/under offer, generating £63m of future rent when fully let
- Significant future optionality within the portfolio. 2.1m sq ft near and medium term development pipeline, including Norton Folgate, where enabling works have commenced
- Storey operational across 297,000 sq ft; further 91,700 sq ft identified
- Smaller, more focused Retail: Driving operational outperformance in a challenging market
- 605,000 sq ft of leasing activity; 1% ahead of passing rents; 96% occupancy
- Significantly outperforming benchmarks: footfall 440 bps ahead; LFL sales 420 bps ahead
- £236m off-strategy assets sold since April 2019, 6% ahead of book value
- Two thirds of store vacancies since April 2017 following CVA or administration are either re-let, under offer or in negotiations
- Secured resolution to grant planning for our Canada Water Masterplan: valuation up 12%
- 53 acre mixed use regeneration scheme including plans for 3,000 homes
- Headlease drawdown expected Spring 2020
- Continued strong performance on Sustainability benchmarks
- GRESB 4* and awarded a green star rating for the 10th consecutive year
- AAA MSCI rating, ranking within the top 9% overall