TIDMBLND
RNS Number : 9940E
British Land Co PLC
13 July 2021
British Land Operational Update
13 July 2021
Following the latest quarter date for rental payments on 24
June, British Land is providing the following operational update to
coincide with our AGM.
-- Strong operational performance
o 183,000 sq ft campus lettings in the first quarter including
134,000 sq ft to JLL at 1 Broadgate; under offer on a further
419,000 sq ft
o Across our Retail portfolio, footfall and sales 86% and 94% of
pre pandemic levels in the 7 weeks since the reopening of indoor
hospitality on 17 May
o Retail parks continuing to clearly outperform; footfall and
sales 96% and 99% of pre pandemic levels
-- Improved rent collection
o 85% of June 2021 rent collected to date; Offices 99%, Retail
71%; Retail collection 24ppt ahead of rent collection at the same
point for the December quarter and 17ppt ahead of the same point
for the March quarter
o March rent collection now 91% overall, 99% in Offices and 85%
in Retail
-- Further progress against strategy
o Practical completion of 1 Triton Square, a net zero carbon
development at Regent's Place
o Commitment to develop Aldgate Place Phase 2, a 136,000 sq ft
mixed use, residential-led development
o Thurrock Shopping Park, a well-let retail park just off the
M25 with strong logistics development potential, acquired for
GBP82m, an attractive GBP3.81m an acre
o Indications that retail park values are rising, with those
assets valued quarterly up 0.7% for the quarter to June
o Under offer on the sale of Wardrobe Court, a standalone
residential building in the City of London
o Refinancing of 100 Liverpool Street completed, raising a new
GBP420m 5 year 'Green Loan'
Simon Carter, CEO British Land said: "With lockdown restrictions
lifting, we have seen a notable improvement in activity across our
markets and our business is performing well. On our retail parks,
footfall and sales are close to pre pandemic levels, rents are
stabilising with recent deals in line with March ERV and there are
indications that retail park values are starting to rise as more
investors target the market. At Storey, our flexible workspace
offer, activity is above pre pandemic levels. Elsewhere on our
Campuses, we see good occupier interest for new and refurbished
space, which we expect to be supportive of office rents and values
as we move through the year."
Strong operational performance
Strong performance on footfall and sales since reopening,
particularly on retail parks which represent 53% of our retail
assets (as at 31 March 2021) as set out below:
17 May - 3 July 2021 Footfall Sales
% same period Benchmark outperformance % same period
in 2019 in 2019
-------------- ------------------------- --------------
Portfolio 85.7% +9.3ppt 93.5%
Retail Parks 96.1% +1.1ppt 98.6%
Shopping Centres 74.8% +3.8ppt 89.1%
-------------- ------------------------- --------------
Note Sales benchmark not meaningful for this period
We have seen a strong response to the re-opening of indoor
hospitality with restaurant sales on our portfolio up 6% in the
period compared with the same period in 2019. Jewellery,
Accessories, Childrenswear, Furniture, Homewares and Convenience
Stores also demonstrated good growth compared to pre pandemic
levels.
Improved rent collection
Across the business, GBP87m of rent was due for payment in the
June 2021 quarter. This comprised GBP43m in Retail and GBP44m in
Offices. As of 8 July 2021, 11 working days after the quarter end,
we had collected 85% of the total amount. This compares to 72% of
the total amount collected at the same point following the December
quarter end and 76% following the March quarter end.
June quarter date rent collection, as at 8 July 2021:
Rent due between 24 Offices Retail(1) Total
June and 8 July 2021
-------- ----------
Received 99% 71% 85%
Rent forgiven - - -
Customer paid monthly - 11% 5%
Outstanding 1% 18% 10%
----------------------- -------- ---------- -------
Total(2) 100% 100% 100%
-----------------------
GBP44m GBP43m GBP87m
----------------------- -------- ---------- -------
(1) Includes non-office customers located within our London
campuses.
(2) The amount billed is less than was billed in previous
quarters due to the exclusion of Scottish quarter date amounts
which are due to be billed on 28 August and monthly amounts due for
August and September which will be billed later in the quarter.
Following further cash collection in recent weeks, our rents for
the March quarter are now 91% collected, with 99% in Offices and
85% collected in Retail.
Where appropriate, we have agreed pragmatic and equitable
solutions for the periods of closure, which include monthly
payments and concessions. However, with trading restrictions
substantially lifted and the vast majority of our customers trading
well and paying the rent due, we do not expect to make further
concessions this quarter.
Further progress against strategy
In May, we set out a new strategy to exploit our competitive
strengths in development and active management, investing behind
two strategic themes, our Campuses and Retail & Fulfilment. We
have maintained our pace of delivery since year end, with good
progress in both areas:
Campuses
We continue to see good interest on our development space and,
at Storey, viewings and enquiries are above pre pandemic levels.
More recently we have seen a noticeable increase in demand for
existing, refurbished space and our recent F&B lettings to four
exciting new brands at 155 Bishopsgate, covering over 7,000 sq ft,
are an encouraging sign of activity in this part of the market.
These include 2,700 sq ft to Neat Burger, a plant-based burger
restaurant backed by Lewis Hamilton and 3,300 sq ft to Nest, a bar
and restaurant run by Urban Pubs and Bars. In total, 183,000 sq ft
of deals have completed in the first quarter of the year, including
the pre let of 134,000 sq ft to JLL at 1 Broadgate. In line with
our focus on innovative growth sectors, we were pleased to let
7,000 sq ft to FabricNano, a biomanufacturing specialist at our
Regent's Place campus. We are under offer on a further 419,000 sq
ft of space.
We achieved practical completion at 1 Triton Square in May; the
building is fully let to Dentsu Aegis Network. Consistent with our
focus on reusing existing materials, we retained virtually all the
superstructure of this building so embodied carbon was low at 448kg
COe(2) per sqm, ahead of our 2030 target. We have offset the
residual carbon through certified schemes; a teak afforestation
project in Mexico and a community reforestation project in Ghana.
We have mirrored that with an additional commitment in the UK,
supporting the planting of 23,000 trees through the Woodland Carbon
Code. As a result, like 100 Liverpool Street which reached
practical completion in October, 1 Triton Square will be a net zero
carbon development.
We have committed to the development of our first build to rent
residential building in Aldgate. This brings total development
commitments to more than 1m sq ft since November 2020, following
recent commitments to 1 Broadgate and Norton Folgate. Phase 2 of
Aldgate Place is an exceptional building in a thriving part of the
City. It comprises 159 premium built to rent apartments, 19,000 sq
ft best-in-class office space and 8,000 sq ft of retail and leisure
space and includes a comprehensive upgrade to the public realm. We
have further residential opportunities at Canada Water, our fourth
London campus, where our flexible planning consent allows us to
deliver between 2,000 and 4,000 homes.
Retail & Fulfilment
We have a market leading position in open air, out of town
retail parks which represents 53% of our retail assets.
Encouragingly, those retail parks which are valued on a quarterly
basis increased in value by 0.7% in the quarter to June. We
continue to see a value opportunity, reflecting current market
yields and a more stable occupational market, driven by
affordability and stronger demand from retailers who recognise the
important role retail parks can play in supporting their
omnichannel strategy. Since 1 April 2021, we have let 38,000 sq ft
of space (deals over one year) on our retail parks, overall in line
with March ERVs and we have a strong pipeline of deals under offer.
We have expanded our approach to include development led investment
into urban logistics and in line with this, acquired the Thurrock
Shopping Park for GBP82m (an attractive GBP3.81m per acre) from
Nuveen Real Estate, one of the largest investment managers
globally. This presents a clear urban logistics development
opportunity given its prime location just off the M25 and proximity
to east London. In its current use it has a strong occupier line up
including Decathlon, Adidas, Nike, TK Maxx, Iceland Food Warehouse
and Pets at Home and benefits from an excellent catchment where
significant population growth is expected.
Capital recycling & financing
Our strategy is supported by a more active approach to capital
recycling. We have maintained momentum since the year end and are
under offer on the sale of Wardrobe Court, a standalone residential
building in the City of London.
In June we completed the refinance of 100 Liverpool Street with
the Broadgate JV raising a new GBP420m 5 year 'Green Loan' secured
by the property. As part of the refinance, this recently completed
BREEAM Outstanding and net zero carbon development was released
from the Broadgate securitisation alongside the redemption of
GBP107m of bonds. There was strong interest from lenders for the
new loan, reflecting the quality of the property, at an initial LTV
of c.50%. We were pleased that a club of three lenders including
Crédit Agricole Corporate and Investment Bank and DBS Bank Ltd.,
London Branch agreed to provide the loan in equal shares. Crédit
Agricole Corporate and Investment Bank and DBS Bank Ltd., London
Branch were also Mandated Lead Arrangers and Green Loan
Advisers.
Appendices
Rent collection, March quarter 2021(1)
Rent due between 25 Offices Retail(2) Total
March and 23 June 2021
-------- ----------
Received 99% 85% 91%
Rent forgiven - 1% -
Outstanding 1% 15% 9%
------------------------- -------- ---------- --------
Total 100% 100% 100%
-------------------------
GBP49m GBP67m GBP116m
------------------------- -------- ---------- --------
(1) As at 8 July.
(2) Includes non-office customers located within our London
campuses.
Enquiries:
Investors & Analysts:
David Walker 07753 928382
Media:
Lizzie King 07808 912784
Notes to Editors
About British Land
Our portfolio of high quality UK commercial property is focused
on London Campuses and Retail & Fulfilment assets throughout
the UK. We own or manage a portfolio valued at GBP12.7bn (British
Land share: GBP9.1bn) as at 31 March 2021 making us one of Europe's
largest listed real estate investment companies.
We create Places People Prefer, delivering the best, most
sustainable places for our customers and communities. Our strategy
is to leverage our best in class platform and proven expertise in
development, repositioning and active management, investing behind
two key themes: Campuses and Retail & Fulfilment.
Our three Campuses at Broadgate, Paddington Central and Regent's
Place are dynamic neighbourhoods, attracting growth customers and
sectors, and offering some of the best connected, highest quality
and most sustainable space in London. We are delivering our fourth
campus at Canada Water, where we have planning consent to deliver 5
million sq ft of residential, commercial, retail and community
space over 53 acres. Our campuses account for c.70% of our
portfolio.
Retail & Fulfilment accounts for 25% of the portfolio and is
focused on retail parks which are aligned to the growth of
convenience, online and last mile fulfilment. We are complementing
this with urban logistics primarily in London, focused on
development-led opportunities.
Sustainability is embedded throughout our business. In 2020, we
set out our sustainability strategy which focuses on two
time-critical areas where British Land can create the most benefit:
making our whole portfolio net zero carbon by 2030, and partnering
to grow social value and wellbeing in the communities where we
operate.
Further details can be found on the British Land website at
www.britishland.com
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