Press Release THE BRITISH LAND COMPANY PLC INTERIM MANAGEMENT STATEMENT A Good Start to the Year Delivering on Strategy 24 July 2013 British Land today publishes its Interim Management Statement for the quarter to 30 June 2013 Chris Grigg, Chief Executive said: We have had a good start to our financial year and our business continues to perform. The economy as a whole is showing some signs of returning confidence, London remains strong and while retail is still challenging, we continue to see encouraging levels of demand for our space. Our purchase of Paddington Central plays to our strengths in the management and development of major London estates: it is in line with our strategy of increasing our exposure to London and the West End and helps replenish our development pipeline. This transaction strengthens our ability to deliver income and capital value growth. Our decision to increase the dividend reflects our confidence in the business. Share placing proceeds deployed and accretive to current year earnings 512 million of acquisitions since start of the year notably 470 million purchase of a major interest in Paddington Central Brings investment of placing capacity to 758 million with 0.7 pence of annualised earnings accretion Dividend increased by 2.3% to 6.75 pence for the quarter and 27.0 pence for the full year reflecting confidence in future cashflows Replenishing development pipeline: prospective near-term pipeline increased to over 780 million 250 million added to near-term prospective pipeline; mainly focused on London offices Total near-term prospective pipeline now stands at 1.4 million sq ft and over 780 million prospective total capital commitment New developments to come on stream as existing committed programme completes All West End developments completing this year; good levels of letting interest 130,000 sq ft of office development space pre-let/under offer: office programme 64% pre-let/under offer 35,000 sq ft pre-let/under offer in the West End; strong interest from the TMT sector at 10 Brock Street 95,000 sq ft of pre-lets completed in the City; 199 Bishopsgate c30% let with further interest Whiteley Shopping opened in May over 90% pre-let; trading ahead of expectations Encouraging levels of leasing activity: continued demand for high quality space 462,000 sq ft of lettings and renewals; investment lettings 4.0% ahead of ERV (3.6% in retail; 5.3% in offices) UK occupancy at 96.6% (pro-forma including recent acquisitions and completions); up 20bps on a like for like basis Retail units in administration reduced from 0.9% to 0.5% of total rent Pipeline of over 550,000 sq ft of space under offer across the portfolio Strong financial position and continued access to low cost finance 410 million of low cost new facilities agreed since the beginning of the year Weighted average interest rate falls from 4.6% to 4.2% 1 (proportionally consolidated) Pro-forma proportionally consolidated LTV at 43.3% 1 (31 March 2013: 40.2%) 1 adjusted for acquisition of Paddington Central * For further information on our leasing activity vs ERV for 3 and 6 months to 30 June see page 5 York House 45 Seymour Street London W1H 7LX T +44 (0)20 7486 4466 F +44 (0)20 7935 5552 W www.britishland.com Registered Office at business address Reg No 621920 England Established 1856
PERFORMANCE REVIEW There are some signs that confidence is strengthening and the UK economy is growing, albeit at very low rates. In property, this improving confidence has been most evident in the investment market which has seen a broadening of investor demand and risk appetite. Overall investment activity has remained strong in London and there has been an improvement in activity and sentiment in shopping centres and retail parks. In our occupational markets, the improvement in demand has largely been confined to the London market where, in offices, the volume of lettings and active demand has increased. In retail, consumer confidence measures have strengthened, operators results have been generally resilient and there have been fewer and smaller administrations. While this more positive backdrop has yet to translate meaningfully into the occupational market, we continue to benefit from occupiers consolidating their portfolios to the best quality locations. Good start to the year operationally and strategically We have had a good start to our financial year operationally and strategically, delivering from our existing portfolio and enhancing our future growth prospects through acquisitions and developments. We continued to be very active on the investment front, deploying the capital we raised at our March equity placing. We have now invested a total of 758 million (excluding any associated development spend) and the contribution from these acquisitions will be accretive to current year earnings, which is ahead of our original expectations. Continued active investment Since the beginning of the financial year, we have made 512 million of acquisitions. Our activity was dominated by the 470 million purchase of a major interest in Paddington Central, a mixed-use office-led estate near Paddington station. The acquisition comprises 610,000 sq ft of income generating properties along with around 430,000 sq ft of potential development, the majority of which is consented. This acquisition is in line with our strategy and plays to our strengths in managing and developing estates: it further increases our exposure to London and the South East; grows our West End office portfolio; and helps replenish our near-term prospective development pipeline. We see significant future opportunity to drive returns through more proactive management of the existing assets and by developing the sites to complete the estate. We disposed of three smaller retail properties during the quarter two supermarkets and a retail park ahead of valuation. Over the coming year, we expect to continue to recycle capital with a focus on retail, ensuring our assets are locally dominant and aligned to the changing requirements of our occupiers and their consumers. To that end, we currently have a number of properties under offer. Replenishing our development pipeline We are positive about the outlook for development returns and have been increasing our pipeline of prospective development opportunities, particularly within London. The acquisition of the development properties at Paddington Central is a significant addition to our pipeline which also includes the Clarges Estate in Mayfair where we have submitted a new planning proposal to increase the residential element in the scheme. We have also recently been chosen by the Corporation of London as their development partner for the Shoreditch Estate, a 2 acre site in an up-and-coming area just east of the City. We are moving forward with our retail development pipeline, obtaining planning consent over the quarter for 220,000 sq ft of extensions on existing schemes, the majority of which are already pre-let/under offer. In addition, we also received unconditional planning permission for a major 98,000 sq ft extension of our shopping centre at Surrey Quays. In total, our prospective near-term development pipeline now stands at 1.4 million sq ft, a total potential capital commitment (including land value) of 784 million. We expect to start on site on the majority of these developments within the next 12-18 months as our committed pipeline completes, having obtained planning permission. Additional information on our prospective pipeline is provided in the appendix on page 5. 2
Encouraging levels of occupier demand across our portfolio Overall, we signed 462,000 sq ft of lettings and renewals in the quarter with investment deals signed on average 4.0% ahead of ERV. Our UK occupancy was 20 bps higher on a like-for-like basis over the quarter. Adjusted for the completion of 10 Portman Square and the acquisition of Paddington Central after the quarter end, our UK occupancy is 96.6%. Our occupancy rate is likely to reduce over the course of the next year as our committed office developments complete which is in line with our plans to let the space closer to or after completion. Evolving our retail offer in the UK In our UK retail business, our activity continued to focus on evolving our overall offer including attracting a broader range of retailer, food and leisure operators and upgrading the physical environment. We saw encouraging demand for our space, signing 320,000 sq ft of lettings and renewals in the quarter with a further 400,000 sq ft under offer. Investment lettings and renewals were signed 3.6% ahead of ERV with activity across all sectors including fashion, food and beverages. Rent reviews were signed on average 5.3% ahead of previous passing rent led by our superstore portfolio. Our UK retail occupancy was modestly ahead in the period at 97.6%, reflecting the letting of units in administration which have fallen from 0.9% to 0.5% of total rent. Our Whiteley shopping and leisure development near Southampton opened on schedule in May, over 90% pre-let. It has traded strongly and ahead of expectations with around three quarters of a million shoppers in its first month. We also have obtained planning for a 58,000 sq ft leisure extension including a nine-screen cinema and restaurants which will increase the overall leisure element at Whiteley to nearly 15%. In Europe, our markets remain tough with our retail parks impacted by poor occupier performance and higher incentives. Benefiting from continued strength in London In Offices, we signed 142,000 sq ft of lettings and renewals with investment lettings signed at 5.3% ahead of ERV and we have a further 158,000 sq ft under offer. In the City, at our recently completed development at 199 Bishopsgate, where we are seeing interest from a broad range of occupiers, we let 11,000 sq ft to Dorsey & Whitney and 14,000 sq ft to SAS Software on terms accretive to valuation. At 1&2 Broadgate, we already have 88,000 sq ft let/under offer which will substantially fill the space recently surrendered by UBS in June (in return for a reverse premium from UBS). These lettings tie in with the lease extensions to 2019 recently agreed with ICAP at which time we will be able to review the options for the refurbishment or redevelopment of the building. Progressing developments with good levels of interest for West End developments We have let or have under offer 130,000 sq ft of London office development space so far this year. This brings the total space let in our development programme over the last two years to over 1.3 million sq ft, generating contracted annual rent of 46 million. All of our West End office developments complete during 2013 starting with 10 Portman Square which reached practical completion in April. Following Saudi Aramco taking a further 9,000 sq ft of space during the quarter, the offices were 51% pre-let on completion. At Regent s Place, the residential scheme at 20 Brock Street completed earlier this month: 84% of the units were sold before completion and we have started marketing the remaining penthouse units. 30 Brock Street has completed and 10 Brock Street will complete imminently. At 10 Brock Street, where we have recently let 7,000 sq ft to Manchester City Football Club, we now have a further 26,000 sq ft under offer which, when completed will leave the building 61% prelet. We have strong levels of interest for the remaining space from the TMT sector. In the City, at 199 Bishopsgate which was completed at the end of last year we are seeing interest from a diverse range of occupiers. The Leadenhall Building topped out in mid-june and we finalised our 95,000 sq ft pre-let to Amlin. The building is around half pre-let which leaves us well-placed to let the upper smaller floors. At 5 Broadgate, steelwork is progressing with completion scheduled for early 2015. We now 3
have vacant possession of Broadgate Circle, which we are redeveloping into a more vibrant restaurant and retail scheme as part of a wider refurbishment of Broadgate South, and demolition is underway. Continuing to access low cost finance Since the beginning of the new financial year, we have agreed 410 million of new committed bank facilities, taking advantage of an improving debt market to re-finance maturing facilities on attractive terms. Based on 31 March 2013 valuations adjusted for acquisitions and disposals (including Paddington Central), our gross asset value is 11.0 billion. Based on this pro-forma gross value, our proportionally consolidated LTV at 30 June 2013 was 43.3% (31 March 2013: 40.2%) and our weighted average interest rate fell from 4.6% to 4.2%. Dividend The first interim dividend payment for the quarter ending 30 June 2013 will be 6.75 pence per share, a 2.3% increase on the comparable period last year. The first interim dividend will be paid on 8 November 2013 to shareholders on the register at close of business on 4 October. The current issued share capital (excluding Treasury shares) is 992,595,326 ordinary shares of 25p each. An announcement on the availability of the split between PID and non-pid income along with the availability of any scrip dividend alternative will be made no later than 4 business days before the ex-dividend date of 2 October 2013. Investor Conference Call British Land will host a conference call at 9am today, 24 July 2013. The details for the conference call are as follows: UK Toll Free Number: 0800 279 5004 UK Number: + 44 (0) 203 427 1906 Passcode: 8820322 A dial in replay will be available later in the day and the details are: Replay number: 0800 358 7735 UK Number: + 44 (0) 203 427 0598 Passcode: 8820322# For Information Contact Investor Relations Sally Jones, British Land 020 7467 2942 Media Pip Wood, British Land 020 7467 2838 Gordon Simpson, Finsbury Group/ 020 7251 3801 Guy Lamming, Finsbury Group 4
Appendix Investment Leasing Activity To 30 June 2013 UK Lettings & Renewals vs. ERV: 3 months % 6 months % - Retail 3.6% 5.3% - Offices 5.3% 4.3% - Total (including Other) 4.0% 5.2% UK Rent Reviews vs. previous rent: - Retail 5.3% 6.6% - Offices 3.1% 1.4% - Total (including Other) 5.1% 6.3% UK Retail Footfall (year-on-year growth): - British Land Retail -1.6% -1.8% - Experian Index -4.1% -4.3% Near Term Uncommitted Development Pipeline AT 30 June 2013 Sector BL Share Sq ft Total Cost 1 '000 m The Clarges Estate, W1 Mixed use 100% 194 318 5 Kingdom Street, Paddington Offices 100% 240 151 Aldgate Place, E1 Residential 50% 356 92 4 Kingdom Street, Paddington Offices 100% 145 91 The Hempel, W2 Residential 100% 40 56 Surrey Quays (extension) Retail 100% 98 24 Yalding House, W1 Offices 100% 30 23 Broughton Park, Chester Retail 44% 54 7 Whiteley Phase 2 (Leisure) Retail 50% 58 5 Fort Kinnaird Edinburgh Retail 22% 85 5 Meadowhall Surrounding Land Retail 50% 22 5 Milton Keynes, Kingston Centre Retail 50% 21 4 Deepdale Shopping Park, Preston Retail 22% 71 3 Total 1,414 784 1 current valuation plus cost to complete and excluding notional interest 5
Forward-Looking Statements This release contains certain forward-looking statements reflecting, among other things, current views on our markets, activities and prospects. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances that may or may not occur and which may be beyond British Land s ability to control or predict (such as changing political, economic or market 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 British Land 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. Except to the extent required by law, British Land does not undertake to update or revise forward-looking statements to reflect any changes in British Land s expectations with regard thereto or any changes in information, events, conditions or circumstances on which any such statement is based. About British Land British Land is one of Europe s largest Real Estate Investment Trusts (REITs) with total assets, owned or managed, of 16.9 billion (British Land share 11.0 billion), as valued at 31 March 2013 but adjusted for recent acquisitions and disposals, notably a major interest in Paddington Central. Through our property and finance expertise we attract experienced partners to create properties and environments which are home to over 1,000 different organisations and receive over 300 million visits each year. Our property portfolio is focused on prime retail locations and London offices which attract high quality occupiers committed to long leases. Following our purchase of Paddington Central, our occupancy rate is 96.2% and average lease length to first break is 10.6 years. Retail assets account for 58% of our portfolio, around 80% of which are located at prime out of town sites. Comprising around 28 million sq ft of retail space across 79 retail parks, 89 superstores, 17 shopping centres and 13 department stores, the retail portfolio is modern, flexible and adaptable to a wide range of formats. Our active asset management delivers space which is attractive and meets the needs of both retailers and consumers. London offices, located in the City and West End, comprise 38% of the portfolio (which will rise to an estimated 40% on completion of current developments). Our 7 million sq ft of high quality office space includes Broadgate, the premier City office campus (50% share) and Regent s Place and Paddington Central in the West End. Since 2010, we have committed 1.2 billion to deliver 2.3 million sq ft of high quality space in London by 2014, including a 700,000 sq ft building at 5 Broadgate, the 610,000 sq ft Leadenhall Building in London s insurance district and a 500,000 sq ft mixed office and residential scheme at Regent s Place in the West End. Our size and substance demands a responsible approach to business and we focus on five areas which matter most to us and our key stakeholders: managing buildings efficiently; developing sustainable buildings; enhancing biodiversity; exceeding customers expectations and focusing on local communities. We believe leadership on issues such as sustainability helps drive our performance and is core to our corporate vision of building the best REIT in Europe. Further details can be found on the British Land website at www.britishland.com] 6