WWW.BRITISHLAND.COM PADDINGTON CENTRAL Property Tour 23 SEPTEMBER 2014
INTRODUCTION Tim Roberts Head of Offices and Residential 2
KEY OFFICE AND RESIDENTIAL HIGHLIGHTS Strengthening leasing performance Successful letting particularly across our recently completed West End developments Successful completion of all our 2010 West End developments Plus 605,000 sq ft at The Leadenhall Building Well timed acquisitions of Paddington and Shoreditch Third major London campus at Paddington Adding significant development potential Achieved important milestones at Clarges Landmark development, on-site, pre-launched with 210m of residential pre-sold Progressing our long-term vision at Broadgate New JV partnership with GIC Crossrail a game changer Broadgate Circle 3
LEASING ACTIVITY ACROSS OUR OFFICE PORTFOLIO Strengthening letting interest in recent months Over 200,000 sq ft leasing activity completed/under offer in Q1 including at Leadenhall and 10 Portman Square Further leasing successes since Q1 announcement, including at 10 Portman Square, Marble Arch House, 39 Victoria Street and Paddington Central 4 Completed/under Leasing Activity FY to 31 March sq ft offer since March* Sq ft Broadgate 225,190 82,300 Leadenhall 106,920 13,600 Regent s Place 196,480 36,600 Portman Village 18,300 62,000 Paddington Central 30,210 6,300 Other 54,900 16,600 Total 632,000 217,400 * As per Q1 announcement
PADDINGTON CENTRAL OVERVIEW 11 acre mixed-use estate in London s West End acquired in July 2013 1.2m sq ft, comprising 7 modern buildings, and a retail and leisure cluster 610,000 sq ft income generating properties Occupied by high quality tenants including AstraZeneca, Nokia, Statoil and Accor Weighted average lease length of 10.1 years Occupancy currently 94% - since acquisition 40,000 sq ft of leasing activity Contracted rent on existing properties 23m, rising to 25m on letting of vacant space and minimum uplifts Average office rent 50 per sq ft, with good prospects for rental growth 435,000 sq ft development potential, including 355,000 sq ft of consented offices, and 80,000 sq ft of mixed use (occupied by Crossrail until 2018) Opportunities to improve estate through more active asset management leveraging successes at Regent s Place and Broadgate 5
PADDINGTON CENTRAL CAMPUS Key: BL ownership Non BL ownership Multi-let offices 268,000 sq ft Multi-let offices 143,000 sq ft Development sites (355,000 sq ft) + Crossrail box below (80,000 sq ft) 200 residential units sold on long leases; retail at ground floor FOUR KINGDOM STREET FIVE KINGDOM STREET ONE KINGDOM STREET ONE SHELDON SQUARE New Hammersmith & City line station and access to Crossrail 206 room 4-star hotel (111,000 sq ft) Non BL ownership 88,000 sq ft retail (16 units) around Sheldon Square 6
ASSET MANAGEMENT INITIATIVES David Lockyer Head of West End Asset Management 7
PROGRESS TO DATE 1 YEAR ON Detailed master-plan developed to form long term vision for the campus and its immediate environment. Improved existing planning consent for 4 KS and redesigning 5 KS Significant upgrade works to public realm with next phase due to start early 2015 Improved connectivity to surroundings with much improved arrival experiences Introduction of a greater variety of uses and occupiers, with increased amenities and improved sense of place Refresh of branding underway around a new vision for the campus Good progress on active asset management and plans to improve the estate Good leasing progress with 34,810 sq ft offices and 5,480 sq ft retail units, let or re-geared since acquisition Increased occupancy to 94% Phase 1 public realm improvements delivered; amphitheatre, events, big screen, vehicular entrance, landscaping, upgraded management Improvements to buildings underway to ensure future proofed for today s occupiers needs Already increased in value by 11% in 8 months to March 2014 8
PUBLIC REALM IMPROVEMENTS QUICK WINS Short-term of objective was to inject life into the campus through summer of sport, film festivals, gigs, food markets, promotions etc to de-sterilise and de-corporatise Before After 9
MASTERPLAN AND VISION The masterplan focuses on improving connectivity and permeability to the campus so that it better relates to it s surroundings and feels part of Central London 10
MASTERPLAN AND VISION Improvements to public realm focused around 7 key areas, as well as the development of 4 and 5 Kingdom Street, are a key factor in delivering the physical elements of the masterplan and Vision 11
NEXT 12 MONTHS PROGRESSING MASTERPLAN Start on site with 4 Kingdom Street Submit planning application for next phase of public realm works which will be focused on the canal-side, the two pedestrian approaches from H&C line exit and Little Venice and the amphitheatre The rebrand of Paddington Central to be launched together with associated signage and on line media Plans to be progressed for the future phases of significant public realm improvements planned Continued advancement of place-making strategy through events, culture and art to improve perception and underline attractions of Paddington as a location 12
PADDINGTON CENTRAL CROSSRAIL Paddington will be one of only three Crossrail stations in London s West End with direct access to City and Docklands New access point to Crossrail will be opposite the entrance to Paddington Central, off Bishop s Bridge Road As part of these works, reconstruction of Hammersmith & City line station with new public square fronting canal recently completed. Approximate Crossrail journey times from Paddington to Key Central London stations Bond Street Tottenham Court Road Farringdon Liverpool Street Canary Wharf 2 minutes 4 minutes 7 minutes 9 minutes 16 minutes 13
IMPROVEMENTS TO SHELDON SQUARE Replace existing harsh stadium lighting Improve shop fronts Upgrade public realm Improve circulation areas and use of amphitheatre 14
IMPROVING THE CANAL SIDE ENTRANCES Upgrade lighting Introduce art installations Introduce signage Widen approaches Improve finishes Underpin attractions of canal 15
IMPROVING THE CANAL SIDE ENTRANCES Upgrade lighting Introduce art installations Introduce signage Improve sightlines and visibility Improve finishes Incorporate underutilised areas to create activity 16
IMPROVEMENTS TO KINGDOM STREET Re-balance the priorities between pedestrians and vehicles Reduce scale to humanise the space Improve the landscaping to soften the feel
ALSO UPGRADING THE BUILDINGS Improving the reception of 2 Kingdom Street to meet occupier needs and their ways of working
DEVELOPMENTS Nigel Webb Head of Developments 19
WE HAVE A STRONG TRACK RECORD IN SUCCESSFULLY DELIVERING DEVELOPMENTS Largest Central London office developer: over 4.5m sq ft completed since 2004 High quality buildings with strong environmental record YORK HOUSE WILLIS BUILDING (SOLD) 201 BISHOPSGATE & BROADGATE TOWER ROPEMAKER PLACE (SOLD) 10 & 20 TRITON STREET 199 BISHIOPSGATE (REFURBISHMENT) COMPLETED COMPLETED COMPLETED COMPLETED COMPLETED COMPLETED 10-30 BROCK STREET 10 PORTMAN SQUARE MARBLE ARCH HOUSE 39 VICTORIA STREET (REFURBISHMENT) THE LEADENDHALL BUILDING 5 BROADGATE EC2 EARLY 2015 COMPLETED COMPLETED COMPLETED COMPLETED COMPLETED
PROGRESSING OUR NEW LONDON DEVELOPMENTS Added 1.1m sq ft of new potential development Estimated profit of c 375m; of which c 290m to come Expect to commit to 4 Kingdom Street later this year Progressing 5 Kingdom Street and Shoreditch plans; retain optionality CLARGES MAYFAIR THE HEMPEL ALDGATE PHASE 1 YALDING HOUSE 4 KINGDOM STREET BLOSSOM ST SHOREDITCH 5 KINGDOM STREET DESIGN STAGE DESIGN STAGE ANTICIPATE COMMITTING UNDER CONSTRUCTION UNDER CONSTRUCTION UNDER CONSTRUCTION UNDER CONSTRUCTION RECENTLY COMMITTED 555,000 sq ft NEAR TERM PIPELINE 708,000 sq ft 21
22 PADDINGTON CENTRAL DEVELOPMENT SITES Secured revised planning consent for improved 145,200 sq ft building 9 floors Anticipated start: Christmas 2014 Anticipated delivery: 2016/17 Situated below existing Crossrail deck at ground level (80,000 sq ft) 8 metre clear slab Possession by 2018 Assessing options for potential retail, leisure, storage or parking 210,000 sq ft of offices (as consented) 14 floors Plan to redesign scheme and add additional floor space Anticipated delivery: 2018/19 4 KINGDOM STREET CROSSRAIL BOX 5 KINGDOM STREET 22
4 KINGDOM STREET CRITIQUE + DESIGN CHANGES Opportunities for improvement Poor sub-divisibility + floorplate variation Lack of ground floor animation Lack of terraces & occupier amenity space External design can be enhanced Proposed solutions and mitigations Redesigned and relocated core to create better sub-divisibility Moved corner reception to central position to create space either side to facilitate potential future conversion to retail at ground level Created corner terraces to improve amenity space for the occupants Relocated plant to accommodate large rooftop terrace. Rationalised glass escape stair to release special space Reduced metal glazing mullions widening views and creating a cleaner appearance
4 KINGDOM STREET DESIGN IMPROVEMENTS GROUND FLOOR RECEPTION TYPICAL UPPER FLOOR Rationalised core and central reception increase sub-divisibility Increased lifting capacity and created terraces & tenant amenity space
4 KINGDOM STREET - DESIGN IMPROVEMENTS FACADES AND TERRACES Consented Proposed - Terraces introduced on each level
4 KINGDOM STREET - DESIGN IMPROVEMENTS PROPOSED ROOF TERRACE
APPENDICES 27
PADDINGTON LOCATION 1 3 2 1. Paddington Central 2. Paddington Station 3. Paddington Basin
THE PADDINGTON AREA 1 2 3 4 5 Paddington Central Triangle site 55-65 North Wharf Road Paddington Basin North Westminster Community School 11 4 5 6 11 Stone Wharf / towards Little Venice 1 2 3 12 Future Crossrail entrance 7 9 8 12 10 6 7 8 9 10 Merchant Square Paddington Station Eastbourne Terrace St. Mary s Hospital Post Office Sorting Office
PADDINGTON CENTRAL KEY OCCUPIERS Top 8 tenants represent c.75% of the income Area Contracted Unexpired Occupier Building sq ft rent pa m lease term Astra Zeneca 2 Kingdom Street 75,000 3.4 11 yrs Nokia 2 Kingdom Street 58,000 3.3 8 yrs Rio Tinto 2 Kingdom Street 26,000 1.5 12 yrs Statoil 2 Kingdom Street 26,000 1.5 13 yrs Accor 3 Kingdom Street 111,000 2.2 17 yrs Cerner 3 Sheldon Square 28,000 1.2 8 yrs Kingfisher 3 Sheldon Square 54,000 2.6 8 yrs Prudential 3 Sheldon Square 25,000 1.5 8 yrs Total Estate 610,000 23.1 10.1 yrs 30
2010 DEVELOPMENT PROGRAMME As at 31 March 2014 Sector BL Share Sq ft PC Calendar Current Value Cost to Complete ERV Pre-let Resi End Value % '000 Year m m 1,6 m 2 m m 3 10-30 Brock Street, Regent s Place 4 Mixed Use 100 505 Completed 402 3 20.5 19.1 118 10 Portman Square Offices 100 134 Completed 183 4 9.8 4.9 - Marble Arch House 5 Mixed Use 100 87 Completed 70 4 4.4-19 39 Victoria Street Offices 100 93 Completed 82 3 5.4 - - 199 Bishopsgate Offices 50 144 Completed 60 1 3.5 2.0 - Whiteley Shopping, Fareham Retail 50 321 Completed 55-2.6 2.4 - Bedford Street Residential 100 24 Completed 34 1 - - 28 Glasgow Fort (Leisure) Retail 59 46 Completed 11 3 0.7 0.7 - The Leadenhall Building Offices 50 605 Completed 265 29 18.9 9.0-5 Broadgate Offices 50 710 2015 251 63 19.2 19.2 - Total 2010 Programme: 2,669 1,413 111 85.0 57.3 165 Data includes Group's share of properties in Joint Ventures & Funds (except area which is shown at 100%) 1 From 1 April 2014 to practical completion (PC) 2 Estimated headline rental value net of rent payable under head leases (excluding tenant incentives) 3 Residential development of which 143m completed or exchanged and a further 16m under offer 4 Includes 126,000 sq ft of residential of which 102m has now sold and completed 5 Includes 10,000 sq ft of residential of which 17m has now sold and completed during the year 6 Cost to complete excludes notional interest as interest is capitalised individually on each development at our capitalisation rate 31
RECENTLY COMMITTED DEVELOPMENT PROGRAMME As at 31 March 2014 Sector BL Share Sq ft PC Calendar Current Value Cost to Complete ERV Pre-let Resi End Value % '000 Year m m 1,4 m 2 m m 3 Milton Keynes, Kingston Centre Retail 50 21 Completed 5-0.3 0.3 - Old Market, Hereford 6 Retail 100 305 Completed 66 15 4.8 3.9 - Craven Hill Gardens Residential 100 25 2014 47 4 - - 58 Fort Kinnaird, Edinburgh Retail 29 55 2014 3 3 0.4 0.3 - Broadgate Circle Offices 50 45 2014 10 8 1.2 - - Broughton Park, Chester Retail 59 54 2014 3 6 0.6 0.6 - Whiteley Leisure, Fareham Retail 50 58 2014 1 6 0.6 0.4 - Meadowhall Surrounding Land Retail 50 22 2015 1 3 0.4 0.4 - Glasgow Fort, M&S & Retail Terrace Retail 59 112 2015 1 20 1.6 0.7 - Deepdale, Preston Retail 29 71 2015 1 4 0.4 0.4 - Yalding House Offices 100 29 2015 11 12 1.5 - - The Hempel Residential 100 40 2016 44 26 - - 92 Aldgate Place, Phase 1 5 Residential 50 221 2016 16 45 - - 65 Clarges Mayfair 7 Mixed Use 100 195 2017 213 183 5.7-449 Total Recently Committed: 1,253 422 335 17.5 7.0 664 32 Data includes Group's share of properties in Joint Ventures & Funds (except area which is shown at 100%) 1 From 1 April 2014 to practical completion (PC) 2 Estimated headline rental value net of rent payable under head leases (excluding tenant incentives) 3 Residential development of which 5m completed or exchanged 4 Cost to complete excludes notional interest as interest is capitalised individually on each development at our capitalisation rate 5 Residential end value excludes hotel site, receipts of 6 million (BL share) estimated 6 Completed post year end 7 Includes 104,000 sq ft of residential
NEAR-TERM AND PROSPECTIVE DEVELOPMENTS As at 31 March 2014 BL Share Sq ft Total Cost Status % '000 m 1 Near-term Pipeline Blossom Street, Shoreditch Mixed Use 100 322 164 Pre-submission 5 Kingdom Street 2 Offices 100 240 162 Consented 4 Kingdom Street Offices 100 147 99 Consented Glasgow Fort (Restaurant & Car Park) Retail 59 10 5 Consented Total Near-term 719 430 Medium-term Pipeline 100 Liverpool Street Offices 50 512 Pre-submission Power Court, Luton Retail 100 149 Pre-submission Aldgate Place, Phase 2 Residential 50 145 Consented Drake Circus Leisure Retail 100 105 Pre-submission Fort Kinnaird, Edinburgh (Debenhams) Retail 29 30 Pre-submission Glasgow Fort (Additional Retail Unit) Retail 59 30 Consented Lancaster Retail 100 300 Pre-submission Eden Walk Shopping Centre, Kingston Mixed Use 50 500-600 Pre-submission Surrey Quays Mixed Use 100 1,500-2,000 Pre-submission Harmsworth Quays Mixed Use 100 1,000-1,500 Pre-submission Total Medium-term 4,271-5,371 1 Total cost including site value 2 210,000 sq ft of which is consented 33
DISCLAIMER The information contained in this presentation has been extracted largely from the Full Year Results Announcement for the year ended 31 March 2014. This presentation may contain certain forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and 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. British Land does not undertake to update forward-looking statements to reflect any changes in British Land s expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based. This presentation is made only to investment professionals as defined in Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 ('the FP Order'). The content of this presentation has not been approved by a person authorised under the Financial Services and Markets Act 2000 ( FSMA ). Accordingly, this presentation may only be communicated in the UK with the benefit of an exemption set out in the FP Order. An investment professional includes: (i) a person who is authorised or exempt under FSMA; and (ii) a person who invests, or can reasonably be expected to invest, on a professional basis for the purposes of a business carried on by him; and (iii) a government, local authority (whether in the United Kingdom or elsewhere) or an international organisation; and (iv) any director, officer, executive or employee of any such person when acting in that capacity. This presentation is published solely for information purposes. This presentation does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy any security, nor a solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, issuance or transfer of the securities referred to in this presentation in any jurisdiction in contravention of applicable law. No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein. The distribution of this presentation in jurisdictions other than the UK may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the UK should inform themselves about, and observe, any applicable requirements. This presentation has been prepared for the purpose of complying with English law and the City Code and the information disclosed may not be the same as that which would have been disclosed if this presentation had been prepared in accordance with the laws of jurisdictions outside the UK. All opinions expressed in this presentation are subject to change without notice and may differ from opinions expressed elsewhere. 34