British Land H2 2025 Earnings Report

British Land EPS Results

• Actual EPS: GBX 28.50
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

British Land Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

British Land Announcement Details

• Quarter: H2 2025
• Date: 5/22/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, May 22, 2025
• Conference Call Time: 4:00AM ET

Our portfolio of high quality UK commercial property is focused on London Campuses and Retail & London Urban Logistics assets throughout the UK. We own or manage a portfolio valued at £13.0bn (British Land (LON:BLND) share: £8.9bn) as at 31 March 2023 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 & London Urban Logistics. 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 5m sq ft of residential, commercial, retail and community space over 53 acres. Our Campuses account for 63% of our portfolio. Retail & London Urban Logistics accounts for 37% 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. Our approach is focused on three key pillars where British Land can create the most benefit: Greener Spaces, making our whole portfolio net zero carbon by 2030, Thriving Places, partnering to grow social value and wellbeing in the communities where we operate and Responsible Choices, advocating responsible business practices across British Land and throughout our supply chain, and maintaining robust governance structures.

British Land H2 2025 Earnings Call Transcript

Key Takeaways

• Delivered 4% underlying profit growth, maintained EPS at 28.5p, and kept the full-year dividend at 22.8p.
• Recorded strong leasing and rental momentum with offices and retail parks leased 9% and 7.5% ahead of ERV, driving like-for-like rent growth of 3–5%.
• Committed developments—including 2 Finsbury Avenue and Broadgate Tower—are forecast to contribute approximately 5p of EPS by FY 2027.
• Balance sheet remains robust with a 38.1% LTV, an A rating, £1.8 billion of undrawn facilities, and no refinancing due before late 2028.
• Guidance for FY 2026 anticipates broadly flat EPS (c.2% underlying profit growth) with 3–6% growth expected in subsequent years.

Presentation

[Simon Carter, CEO at British Land]

It's 9:00 o'clock. So, good morning, everyone. Welcome to our full year results. Great to have you here. Great to be joined by David and Kelly. Today's agenda, we've got three parts to it. David will take you through the financials first, then Kelly, occupational investment markets. As usual, I'll wrap up with the strategy and the outlook before we go to Q&A. Before we do any of that, I just wanted to take a step back. I'm pretty sure that most results presentations at the moment start with referencing the volatile geopolitical backdrop. I do think that for businesses that are nimble, this creates a real opportunity, and we've shown that this year. If you think what we've done, we started off with the sale of Meadowhall. We reinvested all of the proceeds rapidly into retail parks, replacing the earnings.

[Simon Carter, CEO at British Land]

David's team issued a bond at a record-tight credit spread for British Land just before Liberation Day. In terms of retail park activity, we bought a big portfolio, funded it with an equity placing. Of course, there was the pre-let to Citadel and then the JV with Modwen. We have been busy in that market. You will hear today how the operational and financial momentum continues over the last few years. We have leased well across the business, 9% ahead of ERV. Together with our cost discipline and successful asset management, we have been able to grow underlying earnings by 4% and maintained earnings per share despite significant development activity. You will hear today how that development activity is going to be a key source of future earnings growth. Values are up, driven by ERV growth at the top end of our guidance range.

[Simon Carter, CEO at British Land]

As we predicted, campuses passed an inflection point with values increasing in the second half. We're seeing strong fundamentals in our key markets. Return to the office is in full swing. Retailers are competing aggressively for space on our Retail Parks, and supply in both markets is very constrained. We have continued to deploy capital into these markets. We committed to develop 2 Finsbury Avenue and the Broadgate Tower and invested over $700 million into Retail Parks, which now represent a third of our business. We're five years on from the first COVID lockdown. I'm struck by how differently things have played out from what was the perceived wisdom back then. Many people were convinced that work from home would be the norm, and most of our shopping would be online delivered to our front doors.

[Simon Carter, CEO at British Land]

We were not so sure, so we sat down as a management team and we scrutinized the data coming into the business. We also stayed very close to our customers, and we looked at what we were doing in our own lives and across British Land. Based on this, we became increasingly convinced that we could make good money by taking a contrarian position. So we kicked off three million sq ft of office development and bought GBP 1.2 billion of retail parks. Five years on, the return to office trend is very clear, and our retail parks have never been busier or more highly occupied. This has driven strong net absorption of space in both markets. At the same time, very little has been built. The result is we're seeing above-inflation rental growth on both our retail parks and at our campuses.

[Simon Carter, CEO at British Land]

This is driving investor appetite back to these sectors, which is an excellent point to hand over to David. David, over to you.

[David Walker, CFO at British Land]

Thank you, Simon. Good morning, everybody. It has been four years since I last presented our full year results, and it is great to be back today. I have really enjoyed reconnecting with so many of you over the last six months and very much look forward to doing more of that over the next couple of weeks. Before that, though, today I am going to talk about four things. I am going to talk about our financial performance to the end of March, share some thoughts about how we are managing the balance sheet and allocating capital. I will talk you through the levers I identified to drive earnings growth in the business and share some views on guidance for FY2026 and the outer years beyond that. Finally, I will update you on what has been another really good year of progress in terms of sustainability.

[David Walker, CFO at British Land]

Let's start, though, by going through the P&L for FY25 and first net rents. We continue to recycle capital during the year. The loss of income from the sale of Meadowhall and other non-core assets was offset by a subsequent investment into retail parks, including the six months of benefit of parks we bought following our equity placing in October. Developments drive future value. While One Triton Square, Broadgate Tower, and One Appold Street moved into our development pipeline and reduced net rents in the year by GBP 11 million, this was partially offset by leasing progress at our newly completed schemes at Norton Folgate and Three Sheldon Square over at Paddington.

[David Walker, CFO at British Land]

Surrender premium receipts added GBP 9 million to net rents as we actively managed campus assets by taking back floors at 155 Bishopsgate and 20 Triton Street. This allowed us to capture rental growth as we re-let the space. Encouragingly, 88% of this space is already re-let, significantly ahead of previous passing rent. There was a negative movement of GBP 8 million for provisions, and this was the key driver of the increase in Prop X, but it mainly reflected the payment we received from Arcadia in FY2024. Finally, like-for-like growth added GBP 10 million to net rents. Let me take you through this in a bit more detail. We delivered 3% like-for-like rental growth overall. Like-for-like growth, as you know, can be lumpy. Despite some expiries and breaks in the period, campus like-for-like rents were up 2% and up 3% when you look at our three core campuses.

[David Walker, CFO at British Land]

It was driven by good leasing across the portfolio, including deals in buildings such as 338 Euston Road and 155 Bishopsgate. Overall, our campus leasing versus previous passing rent was positive 21.8%. It's been another strong year for our retail business. Like-for-like growth was 5% as we capitalized on the excellent supply-demand dynamics in retail parks. Kelly will go through the detail of our leasing in more detail later. As you know, increasing fee income and managing costs is a key focus for us. Fees and other income grew to GBP 25 million in the year, and we now earn the full fee from managing Meadowhall and further fees from campus joint ventures. We delivered a GBP 5 million reduction in admin costs, which are now down over 8% in the last three years, despite the inflationary environment. As a result, our EPRA cost ratio is 17.5%.

[David Walker, CFO at British Land]

Net finance costs were also GBP 5 million lower as the impact of sales over the last two years was partially offset by development spend. In addition, our hedging continues to mitigate against higher market rates, and our weighted average interest rate at the end of March was 3.6%. Bringing this all together, we delivered underlying profit of GBP 279 million. That's up 4%. Underlying EPS was 28.5p, in line with last year, as the profit growth we delivered fully offset the negative impact of taking properties into development. As a result, the dividend for the year is unchanged at GBP 0.228 per share. That's in line with our policy of paying out 80% of underlying EPS. Turning now to the balance sheet, which is in good shape. NTA is up, and our debt metrics remain within our internal ranges.

[David Walker, CFO at British Land]

There was an inflection point in property values during the year, which were up 1.6% overall, adding GBP 0.13 to NTA. This more than offset the impact of the equity placing, which funded the earnings-accretive acquisition of retail parks, but reduced NTA by GBP 0.11. You'll hear from Kelly shortly the detail of these value moves, including how well these retail parks are performing for us so far. Underlying profit increased NTA by GBP 0.27, which was partially offset by the dividend and other movements, resulting in NTA per share of GBP 5.67 at the year-end and a total accounting return of 5%. We managed the balance sheet to ensure it remained strong and resilient, providing the business with a platform for growth so we can take advantage of opportunities as they arise. We are guided by our financing principles, which you can see here on slide 12.

[David Walker, CFO at British Land]

First, we work to ensure we have a diverse range of funding options available to us. This year, we have enhanced this diversity with over GBP 2 billion of financing activity, including our new sterling bond. Second, we focus on ensuring our debt has the right level of flexibility. That is where we benefit from our use of RCFs, which we can draw down on or repay rapidly as required. We maintain a mix of secured and unsecured debt across the business, and the maturity profile is well phased. Based on our current commitments, we have no requirement to refinance until late 2028. That provides the liquidity and stability we need to take the long-term decisions that drive growth. Finally, we are focused on maintaining strong balance sheet metrics. We know that is important to our investors, our lenders, and rating agencies as we maintain our A rating from Fitch.

[David Walker, CFO at British Land]

Moving on to our financing activity and those debt metrics in more detail. As you can see, we've again been very active in the debt markets. That includes GBP 1 billion of new unsecured RCFs and the extension of a further GBP 700 million of facilities. In March, we successfully issued a seven-year, GBP 300 million unsecured sterling bond. Rated A, the bond was three times oversubscribed and priced at 98 basis points above gilts as we acted to capitalize on these attractive spreads. These transactions have further diversified our sources of finance, extended our debt maturity profile, and improved our liquidity. They are very much aligned to the principles I just described. We ended the year with GBP 1.8 billion of undrawn facilities in cash. Net debt at the year-end was GBP 3.6 billion. Our LTV was 38.1%, and net debt to EBITDA on a group basis was eight times.

[David Walker, CFO at British Land]

Now, while these metrics are at the upper end of our internal ranges, we feel comfortable at this point in the cycle and expect them to reduce over time with values inflecting, income to come from our development pipeline, and a continued focus on capital recycling. If I take net debt to EBITDA, for example, the acquisitions we made in FY 2025 and the expected financing of JV developments when they complete will reduce the ratio to around seven times on a normalized basis. These balance sheet metrics provide the framework that we use to take capital allocation decisions. We dispassionately recycle capital from more mature, lower returning or non-core assets into higher returning opportunities. Currently, that means retail parks and best-in-class office developments. All of our capital allocation decisions are returns-focused and anchored to our cost of capital. Today, that's around 8%, with appropriate risk premiums applied for each subsector.

[David Walker, CFO at British Land]

If we have capital employed that does not beat these hurdles, we look to recycle it through sales or share risk and accelerate returns through the use of third-party capital. You have seen us do this pretty proactively over the last few years, in each case at the right points of the asset life cycle. This slide highlights some of the key activity we have undertaken in the last year. Simon will go through it in a bit more detail later. As you know, we target 8%-10% total accounting returns over the medium term. To be clear, we see this target as income-focused. Given that, I wanted to talk you through the levers I identify to drive earnings growth, like-for-like rental growth, leasing of our developments, a rigorous control of costs, active capital recycling, and linked to that, increasing fee income.

[David Walker, CFO at British Land]

These are the things we focus on as a team. Let me take each of them in turn. First, like-for-like rental growth as we capitalize on the strong fundamentals in our core markets to drive rents in the standing portfolio. This is the engine room of our business. We expect to deliver around GBP 3 million of incremental net rents for every 1% like-for-like growth. We expect growth of 3%-5% in FY 2026. Leasing our development pipeline is the second earnings lever as new developments complete and come on stream into a market which is supply constrained, where the demand for best-in-class space we create continues to strengthen. Our committed developments are expected to deliver around GBP 0.05 of EPS, with 80% of this, or GBP 0.04, coming through by the end of FY 2027.

[David Walker, CFO at British Land]

Third, I will retain a rigorous focus on cost control, as I'm sure you would expect. That includes admin costs, which we reduced by GBP 5 million in FY25. Over the last six months, I've completed a thorough review of our cost base. As a result, we've taken more action to reduce costs since the end of March, with an expected benefit of a further GBP 5 million on an annualized basis. These latest savings will improve efficiency and productivity. I expect admin costs to be below GBP 80 million for FY26, helping to offset any cost inflation and the selective investments we make to drive growth. Alongside admin costs, we also actively manage our finance costs with well-timed issuance like this year's bond and the benefit of our existing hedging. Our active approach to interest rate management is something that we will also, of course, continue.

[David Walker, CFO at British Land]

Capital recycling is a material earnings growth lever as we exit lower returning assets and quickly redeploy into higher returning opportunities. Importantly, when we acquire new assets, we integrate them at minimal incremental cost, just as we did with the 15 retail parks we bought in FY25. This drives an attractive conversion rate, being the drop-through from those incremental net rents into underlying profit and cash. As the fifth and final lever, we will work with existing and new JV partners to increase fee income, as we did most recently at 2 Finsbury Avenue. Fee income is currently GBP 25 million, and I expect this to grow by 10% a year going forward. The vast majority of this will drop to the bottom line as we capitalize on the strength of the platform.

[David Walker, CFO at British Land]

These five levers of growth play firmly to our strengths, and they will increase earnings trajectory over the medium term with a strong focus on cash generation. Turning to earnings guidance, our immediate focus is delivering on the levers I just described, especially driving like-for-like, leasing up developments, and controlling costs. We will also benefit from the full-year impact of our FY25 acquisitions, including the retail parks we bought in October alongside the placing. FY26 does, however, have a number of moving parts as we progress our committed developments, lease up our completed schemes, grow fee income, and see an increase in finance costs. Taking all of that into account, we currently expect EPS for FY26 to be broadly flat, which equates to underlying profit growth of around 2%. Looking further ahead, we expect to deliver 3%-6% earnings growth in subsequent years.

[David Walker, CFO at British Land]

We would anticipate being towards the top end of that range in FY2027 as we benefit from our development pipeline, adding GBP 0.04 to EPS. Now moving on to sustainability. During my five years responsible for sustainability, I have worked tirelessly to ensure our approach has always been viewed through a commercial lens. These 2030 targets were very much set in that context. Sustainability is embedded in how we do business, and it gives us a real competitive advantage. There is growing evidence that more sustainable buildings not only let quicker at higher rents, but are worth more and are more liquid in the investment market. That is why EPCs have been a focus. They are widely seen in the market as a key indicator of the sustainability credentials of a building.

[David Walker, CFO at British Land]

We have had another strong year with A or B ratings now at 68%, up from just 36% three years ago. We have spent a total of GBP 26 million to achieve this so far and recovered around 70% of that through the service charge by making thoughtful interventions, working closely with our customers at the right times. Our efforts in sustainability are consistently recognized by a number of industry bodies, including Gresby. We have retained our five-star rating in their annual survey, outperforming last year's scores for standing investments and developments, where we scored a perfect 100 out of 100. To summarize, we have delivered earnings ahead of consensus with good like-for-like rental growth and rigorous cost control, offsetting the impact of our active development program. Our financial position remains strong and flexible, giving us the platform we need to grow and the ability to act quickly when opportunities arise.

[David Walker, CFO at British Land]

We have a consistent, clear strategy and deliverable levers of earnings growth that play to our competitive strengths. We look ahead with confidence. Kelly.

[Kelly Cleveland, Head of Real Estate and Investment at British Land]

Just hold it. Thank you, David. Good morning, everyone. Last time I was up here, I was only a few weeks into the role. I am delighted to be back and able to present a strong first full-year set of occupational and investment activity. I will start with valuations, which are up 1.6% overall, driven by above-inflation rental growth of 4.9% and at the top end of our guided range of 3%-5%. On our campuses, values were down 0.8%, but as we predicted, they have passed an inflection point with values up 0.8% in the second half. This was largely driven by developments, which were up 3.2% in the second half.

[Kelly Cleveland, Head of Real Estate and Investment at British Land]

The value of our retail park portfolio was up 7.1% due to inward yield shift of 32 basis points and strong ERV growth of 6%, exceeding our full-year guidance. Shopping centers and other retail was up 2.1%. London Urban Logistics values declined by 4.9% based on outward yield shift of 13 basis points. ERV growth on the standing portfolio was 0.8% in the year, with performance impacted by the small size of the portfolio and lack of lease events. Let's turn now to offices and the market backdrop. Demand continues to focus on the best space in the core. If you compare the first quarter this calendar year with the same quarter last year, take-up of new and recently refurbished space in central London is up 29%, and in the city core, has more than doubled. Looking forward, it's also positive.

[Kelly Cleveland, Head of Real Estate and Investment at British Land]

Under-offers in the city are 23% ahead of the 10-year average, and active requirements for over 100,000 sq ft are at a record high. It is quite stark when you see the charts on the right-hand side here, giving us confidence that growth will continue. The graph on this slide demonstrates what we have been saying about location. Best-in-class offices within a five-minute walk of Liverpool Street Station have delivered significantly more rental growth than those even just a fie to 15 minute walk from the station. That shows the huge benefit that occupiers see in having the most accessible locations in London. We have talked before about strong demand for new space in core locations, and that new space is in very short supply. As a result, existing space in these locations is increasingly sought after, and availability is declining.

[Kelly Cleveland, Head of Real Estate and Investment at British Land]

Availability of existing stock in the city has declined by 21% since 2023. Availability of sublet space has declined 66% since the peak in 2023. Rents are increasing. You can see this on the right-hand side, which shows our recent deals on existing space at Broadgate. The depth of the demand is such that we expect this trend to continue in the medium term. Against the positive occupational backdrop, we have delivered an excellent leasing performance with deals on 1.5 million sq ft, double the volume of last year, and 7.5% ahead of ERV. This includes 500,000 sq ft of renewals and re-gears, demonstrating the demand for existing assets in core locations. Excluding new space and under-offers, campus occupancy is reassuringly stable at 97%.

[Kelly Cleveland, Head of Real Estate and Investment at British Land]

EPRA occupancy has increased from 78% to 83%, with the majority of vacancy being recently delivered space, which is also the most sought-after space. We have 250,000 sq ft under offer, 9.2% ahead of ERV, with active negotiations on a further 1.7 million sq ft. We are well positioned to benefit from the lack of supply of best-in-class office as we're delivering over 2 million sq ft of new space over the next three years. We kept momentum on our developments despite the challenges of COVID, supply chain disruption, and inflation, and this is paying off. At Broadgate, we're delivering 1.7 million sq ft, 63% of which is already pre-let or under option, including the 380,000 sq ft pre-let to Citadel during the year. At Regent's Place, we're positioning the campus for science and tech occupiers, given its location in the Knowledge Quarter. Simon will cover this in more detail later.

[Kelly Cleveland, Head of Real Estate and Investment at British Land]

In Cambridge, we have let all of The Optic on a 20-year lease with CPI uplifts. This is a site that we purchased in FY 2023, and we have turned it around in just over two years. It really demonstrates the capabilities of our deeply experienced teams. We have bought it, built it, and leased it well. Turning to the office investment market, we all know it has been challenging but is turning a corner. If you cast your mind back to early 2023, the feeling was that the city was in decline and demand was concentrated in the West End. Volumes were down, demand limited to small lots, and rents were forecast to fall 20%. We have seen them rather rise by nearly that same amount. As a result, we are now seeing the investment market catch up. In the whole of 2024, there were just 10 deals over GBP 100 million.

[Kelly Cleveland, Head of Real Estate and Investment at British Land]

Already, in just the first quarter of this year, there have been seven. This includes our own deal in January, where we sold 50% of our stake in 2 Finsbury Avenue to Modwen, 10% above book value. I'm reassured that investors like Modwen see London as a safe haven with strong rental growth, supported by a 4% five-year swap. Moving on to retail, our parks continue to perform strongly. We completed 1.1 million sq ft of leasing in the year, 9.6% ahead of ERV. We have a further 500,000 sq ft under offer, 11% ahead of ERV. The portfolio remains virtually full at 99%, driven in part by a 93% retention rate for those with breaks or expiries in the year. Retail parks are the most efficient format for most of our occupiers, which is incredibly important considering cost pressures on the retail sector.

[Kelly Cleveland, Head of Real Estate and Investment at British Land]

Importantly, there was no drop in leasing transactions after the autumn budget. You can see here it was quite the opposite. Second-half volumes were more than double those of the first half, and we have a further 500,000 sq ft under offer, really demonstrating the affordability of the format as well as the competition for space. We have said before that we acquire well due to the scale of our retail portfolio and our experience, which gives us competitive edge for underwriting deals. During the year, we bought 15 retail parks worth over GBP 700 million at a yield of 7%. We have leased or re-geared 110,000 sq ft across these parks, 3% ahead of our underwrite. As an example, we bought Didcot in September, and since then, we made a key letting to Mountain Warehouse, who upsized to a unit that had not been let since 2017.

[Kelly Cleveland, Head of Real Estate and Investment at British Land]

Hotel Chocolat then backfilled their space, highlighting demand beyond traditional retail park occupiers. We are pleased that footfall in the second half was up 6% like-for-like to the prior year. Turning now to logistics, the long-term fundamentals of the sector remain strong, and logistics vacancy in London is very low. For zone one to two urban logistics, it is just 0.2%, and this is where we are delivering our first developments, starting with Mandela Way in Southwark. Further out in East London, vacancy has increased while the fundamentals in retail parks have strengthened. Last month, we took the decision to keep Southwark as a retail park. We already have 78% of the space let or under offer and expect to reach near full occupancy over summer. In the meantime, we continue to generate good rental income on the logistics standing portfolio.

[Kelly Cleveland, Head of Real Estate and Investment at British Land]

I'd like to leave you with three things. First, our portfolio has passed an inflection point with values up, driven by strong ERV growth at the top end of our guidance. Second, demand for existing London office space in the best location is now growing due to a shortage of new space, as shown by our second highest volume of leasing deals in at least 15 years. Finally, as the market leader in retail parks, we're driving real value, including from our new acquisitions, with footfall, sales, rents, values, and total returns all up year on year. Thank you very much. I'd also like to thank the team for a great six months. Now back to Simon.

[Simon Carter, CEO at British Land]

Thanks, Kelly. As I said earlier, the return to the office is very much in full swing.

[Simon Carter, CEO at British Land]

Occupancy on our campuses from Tuesday to Thursday is back at pre-COVID levels, as you can see on the slide. Monday is increasingly closing the gap on the middle of the week. It is probably safe to assume that Fridays will remain quieter. What does the return to the office mean for our portfolio? You have just heard from Kelly about the strong demand for new space in the core. Supply is very constrained, particularly in the city. You have seen this graph before. We estimate a 5 million sq ft shortfall of new or substantially refurbished space to the period to 2029 in the city. As a result, rents are growing strongly. At Broadgate, for example, we have seen asking rents at 2 Finsbury Avenue increase by 10-15% since Citadel last year.

[Simon Carter, CEO at British Land]

Cushman & Wakefield are forecasting rents for this type of space to grow by a further 8% per annum to 2028. We are making the most of this favorable window by accelerating development, often with the help of third-party capital, just as we did at 2 Finsbury Avenue in January through a new JV with Modwen Properties. The GBP 100 million consideration has crystallized part of the profits from the pre-let and also placing the main build contract. We are recycling the proceeds into the Broadgate Tower refurbishment. Here, we are capitalizing on a shortage of tower floors in the city. The scheme is expected to complete in late 2026 when supply is particularly tight, with just 12 floors available. We expect to attract occupiers looking for well-located, high-quality space in a thriving campus environment. We are already responding to requests on over 100,000 sq ft.

[Simon Carter, CEO at British Land]

We plan to replicate the overall success of Broadgate at Regent's Place. Like Broadgate, it benefits from some great transport connections, which will be further enhanced by HS2. It also benefits from its proximity to a unique cluster of world-leading institutions, as you can see on this slide. The Knowledge Quarter is growing about 50% faster than the rest of the London economy. This is driven by the science and tech sectors, especially where AI crosses over with medicine. Based on these factors, we believe that Regent's Place has huge potential. It's perhaps 5-10 years behind Broadgate in terms of amenities, public realm, and world-class buildings. We were delighted to receive a thumbs up from the planners for the Houston Tower. As you know, office towers and large floor plates are very rare in the west end. This 31-story scheme has both.

[Simon Carter, CEO at British Land]

It's been designed by the award-winning 3XN, who also designed 2 Finsbury Avenue. We expect it to lease well, deliver a yield on cost of 7%, with an unlevered IRR in the mid-teens. We will look to bring in a partner given the scale of the scheme. We have a strong track record of doing this with world-leading institutions who are attracted by our development and asset management expertise. Bringing in partners allows us to accelerate development, share risk, and earn valuable development management fees. It's one of our key strengths. You heard from Kelly that there is a supply crunch for new space in the core. This unfulfilled demand is now targeting good existing stock in these locations. Second-hand availability is down sharply, and rents are rising. We think this will be the dominant theme.

[Simon Carter, CEO at British Land]

Some more price-sensitive occupiers, who still want to secure a new building, are adding emerging locations to their searches. These markets have been quiet since COVID, but leasing activity for new space has more than doubled since 2023, albeit from a low base. We are seeing increasing inquiries and negotiations for the space we have just delivered at Canada Water. The first phase here is now nearing completion. The placemaking is really beginning to take shape. A new dock and boardwalk form the centerpiece of the scheme, and our cultural hub, Corner Corner, opened last month. It has already had 100,000 visitors, with another 500,000 expected by the end of the year. We are seeing increased interest in the recently delivered dock shed. We are under offer with our first occupier and in active conversations on 180,000 sq ft.

[Simon Carter, CEO at British Land]

We've sold 46 residential units at an average of GBP 1,250 per sq ft ahead of our underwrite. We expect sales velocity to increase when we reach completion later this summer. Let's move now to the parks, where occupational fundamentals have continued to strengthen since we first identified the opportunity four years ago. The affordability, accessibility, and adaptability of parks means a wide range of retailers are competing for space, leading to strong net absorption. Increased costs for retailers are likely to accelerate the shift from the high street and secondary shopping centers to this more cost-efficient format. There has been virtually no new supply of retail parks over the last 10 years, as you can see here. It seems unlikely this picture will change, given restrictions on out-of-town planning and values below replacement cost.

[Simon Carter, CEO at British Land]

For example, we bought assets this year at an average of GBP 250 per sq ft, compared to an estimated build cost of around GBP 400 per sq ft, and that excludes the land. With increasing demand, no new supply, it is obvious what is happening. Rents are growing strongly. This rental growth, together with attractive yields, limited capital expenditure requirements, and liquid lot sizes, makes parks a conviction sector for us. The investment market is more competitive, but we have a clear edge underwriting schemes given the scale and breadth of our retailer relationships. We are very happy to take leasing risk because we only buy good trading locations. Let's look ahead to the outlook. Liquidity in our markets continued to improve during the year, supported by the strong occupational fundamentals. However, heightened geopolitical and macro uncertainty continues. Against this backdrop, our portfolio's cash flow predictability and above-inflation rental growth are increasingly important.

[Simon Carter, CEO at British Land]

The favorable supply-demand picture you've heard about gives us confidence in our continued guidance of 3-5% rental growth across our portfolio. Assuming medium-term interest rates do not increase materially, we think investment markets will continue to improve. We're already seeing good activity for the parks, and we expect it to increase for larger offices. Our focus is on driving earnings through the five levers David talked about. These translate into the capital priorities you can see here. At our campuses, we'll continue to recycle out of mature offices into super-prime developments, bringing in partners to accelerate delivery and earn valuable fees. We will grow our retail park business if we can continue to invest at attractive yields and below replacement cost. Before we finish up, I'd just like to emphasize a few points. If it's not clear already, we're in markets with favorable supply-demand dynamics.

[Simon Carter, CEO at British Land]

We create additional value through our development and asset management. With a portfolio yield over 6%, strong rental growth prospects, and development upside, we remain very well placed to deliver attractive returns going forward. Thank you for listening. We will now come onto the stage and take your Q&A. Kelly, David, if you want to join me. I think we'll start with hand up already. I was going to say we'll start with taking questions in the room. Rob, you ready?

[Rob Jones, Operations Oversight Analyst at BNP Paribas]

Keep being. It's Rob Jones from BNP Paribas. I've got three. Simon, you just talked about markets with favorable demand-supply dynamics, where you're located. We've had quite a few inbound questions from investors in the last couple of months or so around life sciences and a bit of nervousness there. I wonder if you'd give any kind of color comment around interest you're still seeing in the element of your portfolio where that's relevant. Do you want me to do all the questions or one at a time?

[Simon Carter, CEO at British Land]

Yeah, you can't have all of them. Yeah.

[Rob Jones, Operations Oversight Analyst at BNP Paribas]

Question two is, I appreciate it's a small part of the portfolio, but do you think that London Urban Logistics asset values have now troughed? And then, David, the last one on cost control. I was pleased to see strong cost control this morning from a breakfast provision perspective.

[David Walker, CFO at British Land]

It's been a root and branch review, Rob.

[Rob Jones, Operations Oversight Analyst at BNP Paribas]

We've not got to the punchline yet. When I nipped over to the JMAP breakfast to get a croissant, I was wondering, of the GBP 5 million of GBP 26 million cost savings that you talk about, A, where that comes from, and B, where you think about a medium-term EPRA Cost Ratio. Thanks.

[Simon Carter, CEO at British Land]

Cool. I'll take the first two of those. It's a life science market. As you know, there was a reduction in VC funding from the peaks it reached during COVID. It was at very, very high levels. It then came down in 2022. It started to rise again, and it's not far behind where it was just before COVID. I do think the important point, and we always make this one, is it's a science and tech strategy as opposed to a life sciences one. I think that's really important when you look at Regent's Place. It's more a broader medicine, actually.

[Simon Carter, CEO at British Land]

Life sciences and medicine. What really is working well at the moment is where that crosses over with AI. We have leased a lot of space this year to AI businesses. We did the deal with Synthesia. We have now got seven of them on the campus. That is what makes that part of London special. I do think, as we look ahead, that the demand is going to continue to grow in that space. As you saw and Kelly mentioned at The Optic, we leased that building to Arm. That is a chip designer driven by what is happening in the AI space. That seems to be the theme where technology meets medicine in our business. On urban logistics values and whether they have troughed, I think they have. The occupational markets are a bit weaker.

[Simon Carter, CEO at British Land]

We're seeing more net absorption of space in retail parks and in offices than you're seeing across logistics in the U.K. I think everyone's aware of that. Vacancy's gone up, but at a 5% equivalent yield. When we look at our schemes, the prospective returns look good on those because it's a development-led portfolio.

[David Walker, CFO at British Land]

On costs, yeah, thank you. Really pleased to have seen the cost base come down by GBP 5 million in FY25. As I said in my remarks, since March, we've had a look across everything and found another GBP 5 million on an annualized basis. In terms of where that's come from, that's been across the business. We've tried to look at areas where we think we can drive and improve efficiency and productivity. As I said, though, that doesn't mean we're not investing and maintaining capacity in those areas where it can drive growth.

[David Walker, CFO at British Land]

We absolutely will do that, but it's not job done, so there'll be more to go. I think what you should expect from me is a kind of rigorous, continuous focus on efficiency, productivity, and that means cost. EPRA Cost Ratio, 17.5% for the end of the year. It's a key metric for us that we look at. I think there is scope for that to come down further, but it's a two-sided coin. On the one hand, it's the control of costs. On the other hand, it's driving income and driving fee income. We're focused on both of those things moving forward.

[Adam Shapton, Senior Analyst at Green Street]

This morning, Adam Shapton from Green Street. I don't have a gag as good as Rob's, I'm afraid. Two on, and they're sort of interrelated to some extent. On retail parks, remains a capital allocation priority to acquire more.

[Adam Shapton, Senior Analyst at Green Street]

I think that you commented, Simon, that the market is getting more competitive. There is US REIT money as well as other sources chasing a lot of the stock. Could you just expand on that a little bit, how broad the opportunity is at the kind of ungeared IRRs that you quote for the portfolio? On your GRI guidance towards the back of the deck, it is very helpful. Can you comment on whether there are any assumptions about acquisitions of retail parks or any other income-generating assets? Also within that, maybe expand a bit on what you assume for lease-up of Norton Folgate and other AMIs and recently completed developments, just to give a bit more color around that.

[Simon Carter, CEO at British Land]

Sure. I will take the first one, Adam, and hand over to Kelly.

[Simon Carter, CEO at British Land]

I think in terms of the return outlook on the parks, if we're investing at 6.75% yields with that 3-5% rental growth, then that's giving us a good double-digit IRR, and that's before any potential yield compression in terms of our ability to deploy. Kelly, do you want to talk to that?

[Kelly Cleveland, Head of Real Estate and Investment at British Land]

Yeah, and we see good future returns from the retail parks. The opportunities are out there. It is a slightly busier investment market, more core capital and core plus chasing, but we have the ability to generate extra returns from our asset management ability, so we can still see those opportunities.

[Simon Carter, CEO at British Land]

David, on GRI,

[David Walker, CFO at British Land]

Hi, Adam. No capital activity assumed in the guidance, but you should expect us to remain active in that respect. I think the long-term average or the average over the recent years is not a bad guide to that.

[David Walker, CFO at British Land]

As we do that, as I described, we're looking to take advantage of that yield gap between what we sell and what we buy. Crudely, if we're able to deliver that, this kind of, call it GBP 1.5 million for every GBP 100 million that we recycle moving forward. In terms of lease-up assumptions, we're fairly conservative, but I think realistic in our guidance. We benefit from One Broadgate and the Optic completing, with the Optic fully pre-let to Arm, One Broadgate ostensibly pre-let to JLL and A&O, so that's locked in. When it comes to the other big schemes through this year, we expect Norton Folgate to be full by year-end. We think at Canada Water, it's a third to a half full by the end of the year.

[Adam Shapton, Senior Analyst at Green Street]

Very helpful. Thank you.

[Max Nimmo, Director of Real Estate Equity Research at Deutsche Numis]

Hi there, it's Max Nimmo at Deutsche Numis. Just one question, I can, on you talked about your cost of capital around 8%. I'm just interested, I appreciate it's not an exact science, but I'm just trying to understand how you think about that and how you come to that sort of 8%.

[David Walker, CFO at British Land]

Sure. So looking at our marginal cost of debt moving forward, looking at the market risk rate, risk-free rate, and market risk premium applied to our sector gets to around 8%. It's something we look at on a fairly regular basis. Clearly, it's changed over time. Wanted to give you a view of where we think it is so that you can get a better idea of how we make those capital allocation decisions and the return hurdles that we look at. It's standard stuff around risk-free rate plus beta, plus a bit of risk premium for our different sources of capital.

[Simon Carter, CEO at British Land]

That kind of translates into standing investments, as I indicated on the retail parks. We want to be in double-digit territory. On our developments, we're in the teens for those. As you can see on our more recent commitments, like the Broadgate Tower, we're in the high teens, mid-teens. That's the kind of range we're in, delivering yields on costs that are 7.5%-8%. I think that is exceeding our cost of capital nicely.

[Max Nimmo, Director of Real Estate Equity Research at Deutsche Numis]

Great. Thank you. Just one other, if I can, just on Canada Water, as you talked about the lease-up there, just so I get a sense, is that broadly in line with your expectations, or is it taking a little bit longer than you thought, or how are you finding that?

[Simon Carter, CEO at British Land]

Oh, Canada Water, we've literally only just delivered the first building, and we'd assumed a 12-18 month lease-up period. The first building completed two months ago. I think we're really pleased to have 180,000 sq ft of space. I expected the market to be quieter, I kind of alluded to that, that we'd seen demand very much in the core, but we're now beginning to see this ripple effect. I don't know whether it's because we've now PCed the building and it's the normal quality you'd expect from British Land. It looks fantastic. The placemaking, that's meaning that these conversations are now really starting. We always felt it would be on delivery. Yeah, we've got to convert those negotiations into deals, but it feels pretty good for this point.

[Max Nimmo, Director of Real Estate Equity Research at Deutsche Numis]

Great. Thank you.

[Sam Knott, Equity Analyst at Kolytics]

Thanks. It's Sam Knott from Kolytics Just on your earnings, sort of longer-term guidance, can you maybe help me understand? You've got this 3-5% top-line growth, and then you'd expect sort of positive impacts from your leverage, from reinvesting retained earnings. Your bottom-line growth is very similar, 3-6% long-term guidance. Is that just very conservative, or are we expecting slower growth, or is there something material negative that I've missed?

[Simon Carter, CEO at British Land]

Prudent, but David, you explain.

[David Walker, CFO at British Land]

No, I don't think there's anything that you've missed. I've outlined the levers that we think are going to drive growth going forward. The principal thing to bear in mind is what I described about the income to come from developments, 0.04 GBP of that income to come in FY2027. That's current committed schemes. I've talked through the leasing assumptions that we make.

[David Walker, CFO at British Land]

I've talked through the 3-5% growth in like-for-like rents. There will be the lease-up of developments and capital activity, which will contribute to that rental line. Our focus then is on how much of that do we convert into underlying profit and cash. That's about driving fee income, which I described in my remarks. It's about controlling costs, mitigating any increases in finance costs. They're the levers. I think, are they conservative? That'll be for you to decide. I think we've taken appropriate assumptions, and we've tried to provide medium-term guidance that you can go away and model and think about.

[Sam Knott, Equity Analyst at Kolytics]

Thank you.

[Zachary Gauge, Equity Research Analyst at UBS]

Thanks. Morning, everyone. It's Zachary Gage from UBS. A couple of questions on guidance, one backward-looking and one more forward-looking. In FY2025, your GRI guidance at the mid-year point was GBP 485 million to GBP 495 million, if I'm not mistaken.

[Zachary Gauge, Equity Research Analyst at UBS]

You came in at GBP 484 million, so slightly below. Could you just touch on what did happen or did not happen over the six months that would have needed to happen to get to sort of the mid or the upper point of that range? The second question is really following on from the GRI guidance for FY26. If you are at GBP 484 million and we take 3% as the lowest range of like-for-like, you get to basically GBP 500 million. Your bottom range is GBP 520 million. I am just eyeballing these numbers, and I know there are incentives to take into account, but if I look at the guaranteed income to come through from developments, you should be basically at GBP 520 million just from that. It kind of feeds into some of the other questions, but are we sort of missing something on the lease-up here that means that these numbers should be a little bit better?

[Zachary Gauge, Equity Research Analyst at UBS]

Obviously, you're below consensus on FY2026, or consensus is for FY2026 earnings. There just seems to be a lot of rent in this development table that I think people were expecting to come through. Are we missing something, or is there something else at play there?

[David Walker, CFO at British Land]

I think in terms of FY2025, Zach, it's just the timing of phasing of the leasing activity that we've seen through the second half. The numbers you described are broadly in line. It's timing and phasing of when those deals come through. Looking ahead, no, I don't think you've missed anything. Like-for-like applies to standing portfolio only, as you say. On top of that, you need to add income to come from the developments as they lease up.

[David Walker, CFO at British Land]

I've outlined the main movers in terms of developments phasing through the year, the amount that we know we have locked in at One Broadgate and The Optic, and the assumptions we've made about Norton Folgate and Canada Water. They are the moving parts that drive into that range, and it is a range of GRI guidance for FY26 and beyond.

[Valerie Jacob, Senior Analyst at Bernstein]

Good morning, Valerie Jacob from Bernstein. I've got a couple of questions. The first one is a follow-up on Canada Water. You talk about your assumption on offices. If you could share what you're underwriting for residential. And my second question is on Story. I see that if we include Story, the like-for-like is 1% below. If you could share what's been happening there and what is your assumption going forward? Thank you.

[Simon Carter, CEO at British Land]

Kelly, do you want to take the question on Canada Water?

[Kelly Cleveland, Head of Real Estate and Investment at British Land]

Yeah, that's on Canada Water rents. Yeah, and timing. Yeah, I think Simon's answered the question on Canada Water leasing timing. Or are you asking about something else? On the residential. Simon, do you want to pick that one up?

[Simon Carter, CEO at British Land]

Yeah, so residential, we're selling the units at GBP 1,250 a sq ft. That's ahead of our underwrite. Velocity has been slower across London, as you know. We will get to practical completion in the summer. I think we're expecting to see an increase then, but yeah, good to see the pricing well ahead of where our underwrite was. And then were you asking about the residential, sorry, the office rental levels or just the residential?

[Valerie Jacob, Senior Analyst at Bernstein]

Sorry, I was just asking about the residential. Okay, go ahead. I mean, how long do you think it's going to take you to selling everything?

[Simon Carter, CEO at British Land]

Of the first phase, we would expect to be sold within about a year, we would expect to be. We're 46 units out of about 180 at this stage. As I say, I think the pace will increase once you can see the product, which you can now.

[David Walker, CFO at British Land]

Just on story like-for-like, it's a relatively small part of the business, so it can be quite lumpy. The big driver of that like-for-like move in the year was at One Finsbury Avenue. That sits between two pretty big development schemes, which has caused somewhat of a challenge. Historically, we feel pretty good about that going forward. Story occupancy is now at 97%. Good interest now in that space. We feel pretty good about that moving forward. Yeah, 1% down on like-for-like. I saw 10%, 1 million. It's 1 million.

[Simon Carter, CEO at British Land]

Yeah, and it should be very positive in the current financial year because of that lease-up to 97% in the portfolio. Any other questions in the room? No. I think, Izzy, if we go to the lines, if we've got any questions, it looks like we have.

[Moderator]

Participants can submit questions in written format via the webcast page, but click the ask a Question button. If you are dialed into the call and would like to ask a question, please signal by pressing star one on your telephone keypad. We will pause for a moment to assemble the queue. We will be taking our first question from Jonathan Kownator of Goldman Sachs. Your line is now open.

[Jonathan Kownator, Executive Director at Goldman Sachs]

Good morning. Thank you for taking my question. Sorry, honing in on the same question on the 2026 guidance. Are there any buildings where you're losing rents from sort of your latest levels, maybe on Broadgate Tower, other areas where you think you're losing rent that we need to be aware of?

[Simon Carter, CEO at British Land]

Morning, Jonathan. I heard that statement, but I don't think so. Basically, it's going to be lease-up of the developments in 2026. That's the name of the game.

[David Walker, CFO at British Land]

That's exactly right. Within those developments, you've got the committed schemes, which we're going to complete over time. You've got the schemes which are finished, which Kelly has described with focus on leasing up. You've got the schemes that we have moved into development. There are three categories, but no, there's nothing out of order that you've missed.

[Jonathan Kownator, Executive Director at Goldman Sachs]

Sorry, were there buildings which are moving into development, which were income producing into last year?

[David Walker, CFO at British Land]

Yes, I talked about in my remarks some of the buildings which that would apply to. One Appold Street would be an example.

[Jonathan Kownator, Executive Director at Goldman Sachs]

Okay. All right. Yeah, no, it'd be good to circle back on these amounts. Thank you.

[Simon Carter, CEO at British Land]

Any other questions on the line? No. Have we got any questions on the webcast? One question. Do you want to take that one?

[Simon Carter, CEO at British Land]

Yeah, from Vencilia the Kempen. Given the strong retail performance in parks, it would be fair to assume yields tighten further. Would you consider acquiring other asset types, and where are you prepared to take leverage in the short term if attractive opportunities arise?

[Simon Carter, CEO at British Land]

We do not assume any yield compression in our underwrite, as I alluded to earlier.

[Simon Carter, CEO at British Land]

Where yields head will be a little bit dependent on interest rates, but I do think with that very strong occupational outlook and the fact that you're returning above where people are seeing cost of capital, it is reasonable to assume we will see some further yield shift. We may look to take advantage of that with some disposals. We disposed of some assets during the period in our retail parks. We sold Woking at about a 5% yield, which was a very good return for us. In terms of future acquisitions, we like assets, as I alluded to, with good cash flow, good AFFO that comes through to the bottom line where we see the same supply-demand fundamentals. Adjacencies, yes, we would absolutely look at. Today, we're buying parks at good yields with good rental growth prospects.

[Simon Carter, CEO at British Land]

That is probably the dominant use of capital on the investment side.

[David Walker, CFO at British Land]

Should I pick up on the balance sheet? As I described, we manage the balance sheet exactly to provide a platform so that we can take advantage of opportunities as they arrive to drive growth. Were the right opportunity to come along, we would flex that, but capital recycling is the key way we want to fund growth in the business. Only if we had visibility into those disposals, including the example that Simon described.

[Simon Carter, CEO at British Land]

Great. No more questions. Any more in the room? No? Good. Thank you very much for your time. I look forward to seeing many of you on the roadshow over the next couple of weeks. Thank you all.

Participants

Executives

• David Walker, CFO
• Simon Carter, CEO
• Kelly Cleveland, Head of Real Estate and Investment

Analysts

• Max Nimmo, Director of Real Estate Equity Research at Deutsche Numis
• Adam Shapton, Senior Analyst at Green Street
• Sam Knott, Equity Analyst at Kolytics
• Jonathan Kownator, Executive Director at Goldman Sachs
• Valerie Jacob, Senior Analyst at Bernstein
• Moderator
• Zachary Gauge, Equity Research Analyst at UBS
• Rob Jones, Operations Oversight Analyst at BNP Paribas
• Analyst at Kempen