British Land Company PLC

We'll make a start. Thank you very much for joining us for our full year results. It's been quite a busy year for the business. You probably noticed, particularly the last couple of months, so we've got plenty to cover. What I do hope you'll get from these results is a real sense of the momentum in the business and the strategic decisions we took three years ago are really delivering for us. We're going to follow the normal running order, so Bhavesh will start with the financials, Darren will cover the operational performance, and I'll come back on the strategy and the outlook. But I thought before we do that, maybe if I just go through the headlines. We're pleased with our operational performance this year. We've continued to lease well across the business with 3.3 million square feet of leasing, 15% ahead of ERV. We've also controlled costs well and taken together this has led to profit growth of 2% despite a number of properties entering development and the meta surrender. Our strategy of focusing on campuses, retail parks and London urban logistics is delivering. ERV growth accelerated to nearly 6%, exceeding our guidance in all our sectors. We did see further outward yield shift of 33 basis points in the year, but the pace slowed in the second half. And combined with good rental growth, this meant second half values were stable, Overall, we outperformed the MSCI total return benchmark by 300 basis points. We've actively recycled capital this year. The highlights include the surrender and joint venture of 1 Triton Square, the sale of our remaining interest in Meadowhall and the commitment and pre-let to 2 Finsbury Avenue. With very good leasing momentum and high occupancy, our base case forecast for rental growth this year is 3% to 5% across each of our markets. Combined with a net equivalent yield of more than 6% and development upside, this provides for an attractive future return profile, which represents an excellent point to hand over to Bhavesh. Bhavesh, over to you.

Thank you, Simon, and good morning, everyone. We've delivered £268 million of underlying profit, representing 2% growth, despite a number of properties entering development and the meta-surrender. Earnings per share was up by 1% at 28.5 pence. In line with our earnings growth, we'll pay a final dividend of 10.64 pence per share taking the full year dividend to 22.8 pence, a 1% increase on the prior year. Net tangible assets were down 4% at 562 pence per share. Following the sale of our 50% stake in MetaHall post-period end, pro forma LTV was 34.6%, down 140 basis points. And group net debt to EBITDA was 6.4 times, flat year-on-year. Let's now walk through our income statement, starting with gross rental income. The impact of the Paddington disposal in July 2022 and the surrender of one Triton Square by Meta in September 2023 were both key drivers of a 3% reduction in gross rental income. Property operating expenses reduced by 23% as a function of strong occupancy, combined with the impact of the one-off collection from Arcadia in the first half. As a result, our net rental income margin was 92.4%, an improvement of 190 basis points. Fees and other income increased by five million pounds as we continue to progress on our joint venture developments. And despite the inflationary environment, administrative expenses decreased two million pounds to 87 million pounds. I'm pleased that our actions to drive fees and control costs have resulted in an APRA cost ratio of 16.4%, down 310 basis points from last year. And we expect this to normalize in the high teens going forwards. Net finance costs were 108 million pounds, down 3 million pounds due to our decision to repay maturing higher cost HUT bank loans with lower margin group facilities. the financing cost associated with development spend was largely offset by disposals. Our hedging protected us from increases in market rates, and our weighted average interest rate at March 2024 was 3.4%. Underlying earnings per share was 28.5 pence, up 1%, and therefore our full-year dividend was 22.8 pence per share, up 1%. Let's now look at earnings per share growth in more detail, starting on the left of this slide. Net divestment resulted in an increase in EPS of 0.5 pence, primarily through the combination of our disposal of a 75% share of Paddington, where lost rents have been offset by subsequent finance cost savings, and nearly £200 million of retail parks acquired over the last 24 months. Developments, whilst being a long-term driver of EPS growth, had the largest downwards impact in the period, as earnings per share were reduced by 2.6 pence. This was due to the designation of 1 Triton Square as a development following the surrender by Meta, the full refurbishment of 3 Sheldon Square at Paddington, and the impact of finance costs on our development spend. Provisions for debtor and tenant incentives gave a 1.2 pence benefit to earnings. Rent collection has now returned to pre-pandemic levels of around 99%. As I mentioned earlier, this includes the one-off collection from Arcadia. Like-for-like income growth further improved earnings, adding 0.4 pence. Strong leasing across all three of our London campuses delivered 4% like-for-like growth, and our campus occupancy now stands at 96%. In addition, story, which represents around 10% of the campus rent roll, remains a key part of the campus proposition and delivered negative 18% like for like in the year. This was largely due to cost rebates we benefited from in the prior period and expiries which can be lumpy. Stronger story performance is expected as occupancy is now at our target of 90% and Darren will provide more detail on this later. Finally, retail and London urban logistics delivered 1% like-for-like growth in the year, as we filled vacant units in our shopping centres, which helped to offset negative reversion coming through on some older leases. We expect growth across all of our sectors in FY25 as we convert strong ERV growth into like-for-like performance. Finally, our actions to drive fee income, control administrative expenses, combined with our financing activity and hedging, further improved our earnings per share by one pence. Looking ahead to FY25, we're comfortable with current market consensus on earnings, and you can find our usual guidance slide in the appendices to the presentation. Moving on to NTA. We started the year with an NTA of 588 pence and saw a 23p decline in the first half, as property valuation declines were partly offset by the surrender premium we negotiated at 1 Triton Square, resulting in a first-half NTA of 565 pence. By contrast, in the second half, NTA was broadly stable. An underlying profit less than dividend paid increased NTA by 1 pence. Other movements, including capital finance costs, reduced NTA by 4 pence. As a result of these movements, we ended the year with NTA of 562 pence, and our total accounting return was negative 0.5% for the year. Turning now to our balance sheet, which I'm pleased to say is in good shape, and further strengthened post-period end by the sale of our 50% stake in Meadow Hall. I'll start with our key debt metrics on the right hand of the slide, which continue to be strong. Following the sale of metal hull, net debt reduces to 2.9 billion pounds. Pro forma net debt to EBITDA on a group and proportionally consolidated basis becomes 6.4 and 8.2 times respectively. And LTV decreases to 34.6%. We continue to have excellent liquidity. At March, we had 1.9 million pounds of undrawn facilities and cash. And based on our current commitments and these facilities, we have no requirement to refinance until early 2027. In August, following the annual review, Fitch affirmed all our credit ratings, including senior unsecured at A, with stable outlook. We completed nearly a billion pounds of financing activity during the year. For British Land, we raised five new term loans totaling £475 million with five-year initial terms, and we extended £475 million in four bank revolving credit facilities to 2028-29. This debt, which is unsecured and flexible, continues to support our strategy and has the same financial covenants as all of our unsecured finance with no interest cover ratios. Let's now look at movements in LTV, where we've kept a tight focus throughout the year. Portfolio valuation declines increased LTV by 1.5%. Acquisitions and investment in our committed development pipeline together increased LTV by a further 3.6%. These increases were largely offset by the sale of the £125 million Office and Data Centre portfolio in the first half. as well as that £149 million surrender premium received from Meta at One Triton Square, and the subsequent £193 million proceeds from a 50% joint venture with Royal London. Post-period end, with the sale of Metal Hall for £360 million, will take total capital receipts since March 2023 to £920 million, with pro forma LTV decreasing 2.7% to 34.6%. You're familiar with this slide, and Simon will touch on our capital activity in more detail later, but let me briefly outline how we've executed our strategy against our capital allocation framework over the course of the year. The resilience of our balance sheet is of utmost importance, and it gives us the flexibility to invest in opportunities as they arise. We're pleased to have strengthened it in the year, with disposals on average 11% above book value and the meta-surrender receipt. will continue to actively recycle capital provided the pricing is right and market conditions permit. We remain selective and disciplined in deploying capital into future acquisitions. We acquired Westwood Retail Park in Thanet at a net initial yield of 8.1% and we continue to seek more retail park opportunities with strong returns. We also have an attractive development pipeline where we expect our committed developments to deliver 4.5 pence of future earnings per share. Finally, shareholder distributions have grown 1% in the year, despite a number of assets entering development in the period. Let's take a closer look at developments, a key driver of long-term value creation for British land, and how we think about them given changing market conditions. Higher market interest rates have increased the exit yields and finance costs. As a result, we've increased our hurdle rates, requiring 12% to 14% returns for London campus developments and mid-teen returns for London urban logistics developments. Our development pipeline is focused on campuses and London Urban Logistics, both sub-sectors where supply of high-quality new space is tight and demand remains strong, allowing us to drive higher rents and increase our returns. The strong supply-demand dynamics alongside construction costs levelling off at around 2% is why we believe we can make good returns. Looking forward, we'll remain disciplined in our approach to future developments. Most recently, we've committed to two new London schemes for campuses and urban logistics at 2 Finsbury Avenue and Mandela Way. Whilst we look at return hurdles, we also target a yield on cost of over 6% and a profit on cost of around 20% when making new commitments. And you can see our two most recent commitments meet our required hurdles because of the strong dynamics in our chosen sub-markets. For example, with 2 Finsbury Avenue, the strong supply-demand dynamic was seen with the pre-let to Citadel, where we've secured record rents for the city. And given the supply shortfall of this super-prime space, we expect the remainder of the building to lease very well. Overall, our development pipeline is well-placed to generate future returns, with total development profit to come expected to be around £1.4 billion. In addition to development profit, our current schemes are also expected to drive future earnings growth. As you can see on the right of the slide, our committed developments, which include the likes of 1 Broadgate, 2 Finsbury Avenue, and Mandela Way, will deliver a total of 4.5 pence of future EPS growth, with 2.4 pence of this being delivered in FY26 alone. So in summary, we've had a good year. We've delivered positive earnings growth. We've been disciplined on capital allocation decisions. And we've maintained a resilient balance sheet and excellent liquidity. And looking forward, we'll continue this approach to drive future returns. Thank you. I'll now hand over to Darren, who will provide an operations and market update.

Thank you, Pivesh. Good morning, everyone. Let's start with valuations. Although yields continued to move out during the period, the pace has slowed down significantly, with values stable in the second half. For the full year, values were down by 2.6%, reflecting a 33 basis point increase in yields. However, the portfolio net equivalent yield now stands at an attractive 6.2%. But what I also want to pull out here is the very strong overall rental growth of nearly 6%, which exceeds our guidance in every sector, demonstrating our concentration on the most in-demand segments of the office, retail and logistics markets. The focus on best-in-class workspace, combined with the benefits of our campus proposition, has enabled us to drive rental values in this area by 5.4%. The retail park subsector goes from strength to strength. Our parks saw rental growth of over 7%, the highest in nearly 20 years. And the excellent demand supply dynamics in the London urban logistics market meant we achieved rental value increases of 10%. Now let me walk you through our activity in each of these areas. The performance of our campuses very much reflects the trends playing out in the wider market. These trends are very clear when you look beneath the surface data of the agent activity reports, which tend to focus on all types of space across the whole of London. So for example, overall take up for FY24 was down 13% versus the 10 year average. But if we look at take up for new and refurbished space in core central London, this is 12% ahead of average. And the forward-looking indicators are very positive. Space under offer, a key measure of demand, increased significantly at the start of the year to 3.2 million square feet, 24% above the 10-year average. The volume of super prime deals, those done in excess of the prime rent, are 36% above the 10-year measure. And as you can see on the graph on the right-hand side, active demand is currently 13 million square feet, 37% above average. So a really strong picture on the demand side. This is also the case on the supply side, where vacancy for best versus the rest continues to diverge, which for new or refurbished space in core central London sits at under 1%, while second-hand space outside the core increased to a record high of over 11%. And as you can see on the right hand chart, the actual amount of new space in the core city and West End is very low. To put this in perspective, there's four times the amount of active requirements to currently available new space. Even if we include all the speculative space under construction to the end of 2027 and assume no new active demand, there's still one and a half times more demand than space available. These very favourable demand-supply dynamics underpin the great leasing performance we've executed in the period, with deals on 679,000 sqft at 8.7% ahead of ERV. Post-period end, we completed a further 316,000 sqft at 13.1% ahead of ERV, including the 252,000 sqft pre-let Citadel at 2FA. And we've seen a noticeable uptick in demand, with a further 544,000 square feet under offer at 9.3% ahead of ERV and over 800,000 square feet of active negotiations. At Storey, we've done 134,000 square feet of deals at a premium of 30% to traditional rents, with occupancy at our 90% target. Story remains a well-evolved, high-quality flex product. Six years in, it's now a key element of our campus offer. We're seeing strong levels of interest and access to the meeting room and conference space we provide are important factors in the decision-making process for new customers to the wider campus. This activity demonstrates the continued demand for best in-class workspace and our campus proposition, with occupiers placing huge importance on getting the best space in an accessible location with high quality amenity and environment. That is why we're consistently reporting strong leasing numbers, combined with the high levels of occupancy you can see here. We're also leasing well across our development pipeline. at Paddington 3 Sheldon Square, completed earlier this year, with an all-electric design and an APCA rating. It's our lowest embodied carbon refurb yet, and the building's already 86% let or under offer. As I mentioned, at 2 Finsbury Avenue, we've secured a 252,000 square foot pre-let with Hedge Fund Citadel, with additional option space, which will increase the space take to over 380,000 square feet, representing 50% of the building. We've since committed to the development, and Simon will cover this in more detail shortly. And next up will be Norton Folgate, the Optic in Cambridge, formerly the Peterhouse expansion, and Canada Water. The office space at Norton Folgate's already 42% let. We've commenced work on 67,000 square feet of fully fitted space, which is likely to be let closer to completion later this year. And we're in active discussions on the Remainer. The optic will be a mix of lab and office space. Simon will cover this in more detail later. And at Canada Water, we're making good progress on phase one, which will be ready for occupation in 2025. The pace of residential unit sales is increasing. We're achieving sales of 1250 per square foot, which is above our target pricing and is attractive relative to competing schemes. We'll also be delivering best-in-class workspace with excellent sustainability credentials and at a good price point targeting upwards from £50 per square foot. Marketing is in full flow and we're talking to a range of potential customers. Plus we've made initial lettings at the modular lab space and we're in negotiations on the remainder. So positive progress so far. And as you know, we benefit from a highly flexible planning consent, meaning we can deliver the right mix of residential, retail and workspace to reflect demand going forwards. Elsewhere on our campuses, we're working up plans at One Triton Square at our Regents Place campus. As many of you heard at our science and tech event, we proactively decided to take back the space from Meta. Key factors in the decision were the £149 million surrender premium, the chance to unlock significant reversion, and the opportunity to accelerate our science and technology strategy. Since then, we've signed a joint venture with Royal London to develop a world-class science and technology building. The joint venture both increases and locks in returns. We received gross proceeds of £193 million, in addition to the surrender premium. This meant we took out the equivalent of 82% of the value before the surrender, and we still retained 50% of the building and of the significant upside. And overall, we expect to deliver an IRR of over 30%. You've seen this slide before, and that's due to the fact that hitting sustainability targets is now very much business as usual. As you can see, we continue to make great progress. This is driving real commercial advantage, with occupiers wanting the best and most sustainable buildings. In 2022, 36% of the portfolio was A or B rated. That's now 58%, and we're on track for it to be around 64% at FY25. We originally estimated the overall cost to get to an AB rating was circa 100 million, of which two thirds would be recovered through the service charge. To date, we spent 18 million, of which 63% has been recovered. So we're comfortable within our forecast number and confident we'll hit our targets. Now, moving on to retail. As we outlined at our investor day in September, and as Simon will cover shortly, there is now a clear structural shift towards the retail park format. And this sector continues to deliver. The supply fundamentals are incredibly favourable. Planning restrictions mean there's unlikely to be any more new stock built in the UK. Less than 5% of the total has been built in the past 10 years. The majority of which was done using historic consents. And the retail park market represents only 8% of total UK retail floor space. So less space nationally, but there's also less units on the ground. The average retail park usually has 15 to 20 units compared to the average shopping centre with over 100. This really helps drive demand-supply tension. Combined with the fact that many retailers are wanting to increase their out-of-town footprint, attracted by the many benefits of the format, including the low occupational cost ratios, which are currently at 9%. These fundamentals are translating into operational performance across our portfolio. We completed 1.5 million square feet of leasing activity in the period at 19.9% ahead of ERV. And we have a further 282,000 square feet under offer at 19.2% ahead of ERV, which is why we remain virtually full with 99% occupancy. Finally, let me turn to logistics. To remind you, we built a pipeline covering 2.3 million square feet with a gross development value of 1.5 billion. In the year, we've seen positive leasing activity and planning progress. We successfully re-geared 230,000 square feet of space across the portfolio at 7% ahead of ERV and more than double the previous passing rent. And we've achieved planning on four out of seven sites, including the box at Paddington, Thurrock, Enfield and Mandela Way in Southwark. where we've already started on site. And we have a committee date next month for Verney Road, also in Southwark. So, our business continues to perform extremely well occupationally, with very strong leasing progress, 4.3 million square feet exchanged or under offer in the year, all at significant premiums to ERV. because we're focusing on the most in-demand segments of the market. Innovation in campus space, where we're seeing increasing levels of demand. Retail parks, the preferred format for retailers. And London Urban Logistics, where we've made strong progress with our development pipeline. Now I'll hand you back over to Simon for an update on strategy.