The British Land Company PLC Full Year Results
Delivery against strategy driving strong performance
18 May 2022
Simon Carter, CEO said: “Over the past year we have delivered a strong performance across all parts of our business as we continue to execute against our strategy. Our total accounting return for the year was 14.8% driven by a 6.8% increase in the valuation of our portfolio and Underlying Profit is up 24.9%. Our balance sheet remains strong with pro forma loan to value of 28.4%. Operationally, our leasing volumes across Campuses and Retail & Fulfilment were the highest in ten years and were ahead of ERV. In London, demand continues to gravitate towards the best, most sustainable space where our Campuses are at a distinct advantage. Retail Parks are an attractive, cost-effective format for our retail customers reflected in our very low vacancy of 2.6%, so we are particularly pleased with our decision to allocate capital to this segment, where valuations have increased 20.7%. The fundamentals of Urban Logistics in London are compelling given the chronic shortage of space. We have made a good start to building our Urban Logistics business where we have assembled a c.£1.3bn development pipeline in 12 months.
We are active recyclers of capital, releasing over £1bn since April 2021 to invest into higher value-creating opportunities in development and growth segments of the market. We have a wealth of development opportunities across our London Campuses, including Canada Water and in Urban Logistics which altogether we expect will generate around £2bn of future profit.
We are mindful of current elevated economic and geo-political uncertainties, but our strategic advantage in sectors with pricing power means we can look ahead with confidence.”
Performance summary
£2.2bn capital activity – actively recycling capital into areas of growth and value
– £694m from the sale of 75% of majority of assets at Paddington Central to GIC post year end, crystallising 9% p.a. total property returns
– £290m from the sale of 50% of our share in the Canada Water Masterplan to AustralianSuper, enabling us to accelerate delivery and returns from the scheme
– On site with 1.7m sq ft of net zero carbon developments across our Campuses; 91% of costs fixed
– £102m of acquisitions in Cambridge and Guildford, building exposure to innovation sectors; on site with first lab enabled scheme
– £350m investment into Retail Parks in the year with a further £49m in FY21, exploiting the value opportunity
– Assembled an urban logistics development pipeline with a gross development value of £1.3bn, focused on London where the supply-demand imbalance is most acute
Strong operational performance – key themes playing out
– Portfolio value up 6.8% with Campuses up 5.4% and Retail & Fulfilment up 9.9% driven by Retail Parks up 20.7%
– 42bps yield contraction overall; 11 bps yield contraction in Campuses; 151bps yield contraction in Retail Parks
– 1.7m sq ft of Campus leasing, highest volume in 10 years; 5.4% ahead of ERV; average lease length over 12 years
– 2.2m sq ft Retail & Fulfilment leasing, highest volume in 10 years, 2.8% ahead of ERV; Retail Park vacancy down to 2.6%
– Footfall and sales on our Retail Parks portfolio 99.5% and 100.2% of FY20, respectively
– Strong rent collection: 97% for the year, nearing pre-pandemic levels, significantly reducing provisions
Excellent financial performance and strong balance sheet
– 14.8% Total Accounting Return, underpinned by our strategic activity
– Underlying Profit up 24.9% reflecting a significant reduction in provisions
– EPRA Net Tangible Assets (NTA) up 12.2% to 727p
– FY22 dividend of 21.92p per share
– Pro forma LTV at 28.4% adjusting for the Paddington Central transaction
– £1.3bn undrawn facilities and cash. Interest rate on our debt fully hedged on a spot basis with no requirement to refinance until late 2025 following the Paddington transaction
– Fitch affirmed senior unsecured credit rating at 'A'
Further good progress against 2030 Sustainability strategy
– Awarded GRESB 5* rating and AAA rating from MSCI
– Delivered our second net zero carbon development at 1 Triton Square, fully let to Meta (previously Facebook)
– Further accolades for 100 Liverpool Street including Green Building Project of the Year by BusinessGreen, Project of the Year at the Building Awards, a Civic Trust Award and Financing Deal of the Year: UK by Real Estate Capital Europe for 2021.
– Completed net zero audits at our major assets; 70% portfolio now EPC A-C rated
– First UK REIT to achieve the Disability Smart Standard accreditation from the Business Disability Forum
Summary performance
Year ended |
31 March 2022 |
31 March 2021 |
Change |
Income statement |
|
|
|
Underlying Profit |
£251m |
£201m |
24.9% |
Underlying earnings per share2 |
27.4p |
18.8p |
45.7% |
IFRS profit/(loss) after tax |
£960m |
£(1,083)m |
|
IFRS basic earnings per share |
103.3p |
(111.2)p |
|
Dividend per share |
21.92p |
15.04p |
|
Total accounting return2 |
14.8% |
(15.1)% |
|
Balance sheet |
|
|
|
Portfolio at valuation (proportionally consolidated) |
£10,467m |
£9,132m |
6.8%1 |
EPRA Net Tangible Assets per share2 |
727p |
648p |
12.2% |
IFRS net assets |
£6,733m |
£5,983m |
|
Loan to value ratio (proportionally consolidated)3 |
32.9% |
32.0% |
|
Fitch senior unsecured rating |
A |
A |
|
Operational Statistics |
|
|
|
Lettings and renewals over 1 year |
2.9m sq ft |
1.2m sq ft |
|
Total lettings and renewals |
3.9m sq ft |
2.2m sq ft |
|
Committed and recently completed development |
2.1m sq ft |
1.8m sq ft |
|
Sustainability Performance |
|
|
|
MSCI ESG |
AAA rating |
AAA rating |
|
GRESB |
5* and |
5* and |
|
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.
2. See Note 2 to the financial statements.
3. Following the sale of a 75% interest in the majority of our assets at Paddington Central, LTV falls to 28.4% on a pro forma basis.