THIS ANNOUNCEMENT, INCLUDING THE APPENDICES AND THE
INFORMATION CONTAINED IN IT, IS NOT FOR PUBLICATION, RELEASE OR
DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR
INTO THE UNITED STATES OF AMERICA, ITS TERRITORIES AND POSSESSIONS,
ANY STATE OF THE UNITED STATES OR THE DISTRICT OF COLUMBIA
(COLLECTIVELY, THE "UNITED STATES"), AUSTRALIA, CANADA, THE
REPUBLIC OF SOUTH AFRICA OR JAPAN OR ANY OTHER JURISDICTION IN
WHICH SUCH PUBLICATION, RELEASE OR DISTRIBUTION WOULD BE
UNLAWFUL
FURTHER, THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY
AND IS NOT AN OFFER OF SECURITIES IN ANY JURISDICTION. PLEASE SEE
THE IMPORTANT NOTICES AT THE END OF THIS
ANNOUNCEMENT.
THIS ANNOUNCEMENT CONTAINS INSIDE
INFORMATION
LEI: RV5B68J2GV3QGMRPW209
For
immediate release
2
October 2024
retail park portfolio acquisition
and trading update
British Land has acquired a portfolio
of seven high quality retail parks for £441m. British Land also
announces a proposed equity placing of approximately £300m, by way
of an accelerated bookbuild offering, to fund this acquisition,
with the remainder of the consideration financed from existing cash
and in place facilities. Further details of the proposed equity
placing are set out in a separate announcement, which should be
read in conjunction with this announcement.
British Land is also publishing a
Trading Update for the six month period ending 30 September 2024,
ahead of Half Year results on 20 November 2024, which confirms guidance for FY25 EPS of 27.9p given at our
FY24 results, before the acquisition and proposed placing announced
today. The proposed placing and acquisition will be accretive to
EPS in FY25 and beyond.
Simon Carter, Chief Executive of British Land,
said:
"The acquisition of this high quality
portfolio builds upon our market leading position in retail parks.
Parks remain the preferred format for retailers and we have
deployed £711m of capital into this subsector since 1 April
2024."
"These assets offer an attractive
yield and strong rental growth prospects in line with our guidance
of 3-5%. Combined with the proposed placing, they will be
immediately earnings accretive and are expected to deliver double
digit ungeared IRRs."
"The broader business also continues
to trade well with a good level of leasing in the period and cost
discipline underpinning our profit performance. We expect portfolio
values to be marginally up for the half year, with continued ERV
growth across the portfolio."
RETAIL PARK PORTFOLIO ACQUISITION
− Acquired seven
retail parks from Brookfield for £441m, reflecting a net initial
yield (NIY) of 6.7% and topped up net initial yield (TUNIY) of
7.2%.
− The assets have
a passing rent of c.£29.5m, a topped up passing rent of c.£31.9m
and an ERV of c.£30.4m. See appendix for details on each
asset.
− The parks are of
high quality, well maintained, with a strong occupier mix. The
assets are 99% occupied and all benefit from a major superstore
anchor.
− The attractive
yield and strong rental growth prospects in line with our guidance
of 3-5%, are expected to deliver double digit ungeared
IRRs.
− Proposed equity
placing of approximately £300m to fund this acquisition, with the
remainder of the consideration financed from existing cash and in
place facilities.
− Combined, the
proposed placing and portfolio acquisition are expected to be
immediately accretive to earnings per share, marginally dilutive to
EPRA net tangible assets (NTA) per share, broadly LTV neutral and
will lower annualised Net Debt to EBITDA.
− Retail parks are
affordable (with low occupancy cost ratios[1]),
adaptable (with low capex requirements) and easily accessible by
the end consumer. With this acquisition, British Land continues to
build scale in this attractive segment, with retail parks
comprising 32% of the total portfolio up from 22% 18 months ago,
and further consolidates its position as one of the largest owners
and operators of retail parks in the UK.
TRADING UPDATE[2]
For the six month period ending 30
September 2024, the Group expects:
Earnings
− Underlying
Profit of £142-144m (HY24: £142m) despite a number of properties
entering development and the prior year surrender of 1 Triton
Square.
− Resulting
underlying earnings per share of 15.2-15.4p (HY24:
15.2p).
Portfolio valuation
− Values to
improve marginally by c.0.2%: Retail Parks c.5.0%, Campuses
c.-1.6%, and London Urban Logistics c.-2.6%.
− Six month ERV
growth of c.2.3%: Retail Parks c.3.6%, Campuses c.1.7%, London
Urban Logistics c.0.3%.
− NEY of c.6.2%,
flat vs March 2024: Retail Parks c.-22bps, Campuses c.12bps, and
London Urban Logistics c.7bps.
Balance sheet
− HY25 Loan to
Value at c.38% (FY24: 37.3%); reflecting the capital activity below
and development spend. We remain disciplined in our management of
leverage and will continue to actively recycle capital.
− Combined, the
acquisition and proposed placing are expected to be broadly LTV
neutral and lower annualised Net Debt to EBITDA.
Further capital recycling
− c.£270m of
assets acquired in the period including seven new retail parks and
the remaining stake in New Mersey Retail Park, Speke, at a blended
NEY of 7.4%, offsetting the EPS impact of the Meadowhall disposal
on an annualised basis.
− Exchanged or
completed on £407m of disposals as we continue to dispose of non
core retail and shopping centres, including Meadowhall, which was
sold in July 2024.
Operational update
− For the five
months to 31 August: 1.5m sq ft of leasing across the portfolio,
8.5% ahead of ERV, with a further 665k sq ft under offer, 3.9%
ahead of ERV.
− Between 31
August and 25 September, 249k sq ft of leasing completed and under
offers at 25 September were 858k sq ft.
Retail and London urban logistics
− For the five
months to 31 August: 585k sq ft of leasing, 8.9% ahead of ERV, with
a further 592k sq ft under offer, 3.6% ahead of ERV.
− Retail parks
continue to perform strongly with over 210k sq ft of leasing, 8.2%
ahead of ERV.
− Retail Park
occupancy remains high at 99%, reflecting strong demand and limited
supply.
Campuses
− For the five
months to 31 August: 885k sq ft of leasing, 8.4% ahead of ERV, with
a further 73k sq ft under offer, 6.5% ahead of ERV.
− Secured first
pre-let at 2 Finsbury Avenue with hedge fund Citadel to lease a
minimum of 258k sq ft of workspace, with options to lease up to
another 122k sq ft; and agreed a further 100k sq ft with A&O
Shearman LLP at 1 Broadgate.
−
Occupancy[3] at c.92%, or 97% excluding
Norton Folgate, which is over 50% let and we are seeing good demand
for the remaining floors at rents ahead of business
plan.
Outlook
− Confirm guidance
for FY25 EPS of 27.9p given at our FY24 results, before the
acquisition and proposed placing announced today.
− The proposed
placing and acquisition will be accretive to EPS in FY25 and
beyond.
The person responsible for making
this Announcement on behalf of the Company is Gavin
Bergin.
- ENDS
-
Investors:
Sean Pearcey-Stone, British
Land
020 7467 3519
Lizzie King, British
Land
07808 912 784
Media:
Charlotte Whitley, British
Land
07887 802 535
Appendix
About the portfolio
The portfolio consists of seven high
quality retail parks totalling c.1.9m sq ft. Occupancy is 99%
and the weighted average unexpired lease term is 4.5 years to break
and 5.9 years to expiry. The parks are let to successful
multi-channel and essential retailers with strong covenants and all
benefit from a major superstore anchor.
· Elliott's Field Shopping
Park, Rugby (21% of GAV):
Well-connected, modern shopping destination, featuring BREEAM
'Outstanding' extension, adjacent to A426 dual carriageway. NOI of
£6.3m (£23.72 psf) and a WAULT to break and expiry of 3.6 and 5.6
years respectively. The scheme is fully occupied (100%), anchored
by M&S.
· Central Retail Park,
Falkirk (18% of GAV): Scheme draws
on fast-growing local population, at a rate twice the UK average,
and dominates its primary catchment. NOI of £5.7m (£14.08 psf) and
a WAULT to break and expiry of 6.3 and 7.9 years respectively. The
scheme is fully occupied (100%), anchored by both M&S and
Tesco.
· Wellington Retail Park,
Waterlooville (15% of GAV): At the
heart of Waterlooville, the scheme represents the principal retail
destination for the town. NOI of £4.1m (£25.55 psf) and a WAULT to
break and expiry of 4.7 and 5.4 years respectively. The scheme is
virtually fully occupied (99.6%), anchored by
M&S.​
· Ravenhead Retail Park, St
Helens (14% of GAV): Constructed in
phases since 2000, presence of premium retailers Nike and Flannels
attracts affluent spend. NOI of £3.7m (£12.52 psf) and a WAULT to
break and expiry of 4.6 and 6.4 years respectively. The scheme is
virtually fully occupied (98.7%), anchored by M&S.
· Cleveland Retail Park,
Middlesbrough (12% of GAV): Situated
seven minutes' drive from Middlesbrough city centre, the scheme has
a well-established local catchment base. NOI of £4.1m (£13.62 psf)
and a WAULT to break and expiry of 3.4 and 4.1 years respectively.
The scheme is virtually fully occupied (98.8%), anchored by
M&S.
· Telford Forge Shopping Park,
Telford (12% of GAV): Scheme is
prominently located west of Telford town centre, and immediately
adjacent to Junction 5 of the M54. NOI of £3.1m (£10.27 psf) and a
WAULT to break and expiry of 5.2 and 5.4 years respectively. The
scheme is virtually fully occupied (96.2%), anchored by
Sainsbury's.
· Chilwell Retail Park,
Nottingham (8% of GAV): Situated in
western suburbs of Nottingham, the scheme draws on affluent
catchment populations of Beeston, Long Eaton and Chilwell. NOI of
£2.6m (£18.56 psf) and a WAULT to break and expiry of 3.6 and 5.8
years respectively. The scheme is fully occupied (100%), anchored
by M&S.
Notes to Editors
About British Land
British Land is a UK commercial
property company focused on real estate sectors with the strongest
operational fundamentals: London campuses, retail parks, and London
urban logistics. We own or manage a portfolio valued at £13.0bn
(British Land share: £8.7bn) as at 31 March 2024.
Our purpose is to create and manage
Places People Prefer - outstanding places that deliver positive
outcomes for all our stakeholders on a long term, sustainable
basis. We do this by leveraging our best in class platform and
proven expertise in development, repositioning and active asset
management.
We have both a responsibility and an
opportunity to manage our business in an environmentally and
socially responsible manner. Our approach to sustainability is
focused on three pillars: Greener Spaces, Thriving Places and
Responsible Choices. Read more about us at
www.britishland.com.
Forward-looking statements
Nothing in this announcement should
be construed as either an offer or invitation to sell or any
offering of securities or any invitation or inducement to any
person to underwrite, subscribe for or otherwise acquire securities
in any company within the Group or an invitation or inducement to
engage in investment activity.
Certain information contained in
this announcement may constitute "forward-looking statements",
which can be identified by the use of terms such as "may", "will",
"would", "could", "should", "expect", "anticipate", "project",
"estimate", "intend", "continue", "target", "plan", "goal", "aim"
or "believe" (or the negatives thereof) or other variations thereon
or comparable terminology. These forward-looking statements include
all matters that are not historical facts and include statements
regarding the Company's intentions, beliefs or current expectations
and those of our Directors and employees concerning, amongst other
things, the Company's results of operations, financial condition,
changes in global or regional trade conditions, changes in tax
rates, liquidity, prospects, growth and strategies, acts of war or
terrorism worldwide, work stoppages, slowdowns or strikes, public
health crises, outbreaks of contagious disease or environmental
disaster. By their nature, forward-looking statements involve
inherent risks, assumptions and uncertainties that could cause
actual events or results or actual performance of the Company to
differ materially from those reflected or contemplated in such
forward-looking statements. No representation or warranty is made
as to the achievement or reasonableness of and no reliance should
be placed on such forward-looking statements.
The Company does not undertake any
obligation to update or revise any forward-looking statement to
reflect any new information or change in circumstances or in the
Company's expectations.
