Simon Carter, CEO said: "I'm pleased we have delivered a good operational performance despite the challenging macroeconomic backdrop. We leased 3.4m sq ft of space, 15% ahead of ERV and portfolio occupancy is now 96.7%. Our focus on sectors with strong occupational fundamentals drove like-for-like net rental growth of 6% which, combined with a firm grip on costs, increased Underlying Profit by 7%.

In line with our strategy, we continue to actively recycle capital. We made disposals totalling £746m mainly at Paddington Central which crystallised total property returns of 9% p.a. Recently, we acquired over £200m of high quality retail park, life sciences and London Urban Logistics assets at attractive prices.

Higher interest rates have inevitably had an impact on property market yields and, as a result, the value of our portfolio declined by 12.3%. Whilst we remain mindful of ongoing macroeconomic challenges, the upward yield pressure appears to be easing and there are early signs of yield compression for retail parks.

Ultimately, value in real estate is created over the medium to long term. We like to invest in supply constrained segments with pricing power, where we can be market leaders and leverage our competitive strengths to generate attractive returns. We already lead in campuses, where we continue to see strong demand for best in class space and are increasing our focus on life sciences and innovation sectors. We are consolidating our position as the largest owner and operator of retail parks where scale is an advantage, and we are building a unique portfolio of centrally located and highly sustainable urban logistics schemes in London.

We have high quality assets, a best in class platform, a strong balance sheet, and we continue to see significant opportunities for future value creation through both development and capital recycling."

Financial

• Underlying Profit growth of 6.9%
• Excellent cost control: administrative costs flat year on year and EPRA cost ratio 19.5% significantly lower than 25.6% in FY22
• Underlying EPS of 28.3p up 4.8% and full year dividend of 22.64p per share up 3.3%¹, final dividend to be paid on 28 July 2023

Lettings

• Strong leasing with 3.4m sq ft leased, 15.1% ahead of ERV and 914,000 sq ft under offer, 18.4% ahead of ERV
• 1.0m sq ft of Campus leasing, 11.0% ahead of ERV; further 106,000 sq ft under offer, 8.6% ahead of ERV
• 2.4m sq ft Retail & London Urban Logistics leasing, 18.8% ahead of ERV; further 808,000 sq ft under offer, 19.5% ahead of ERV

Portfolio

• ERV growth of 2.8%: Campuses +2.6%, Retail Parks +2.8% and London Urban Logistics +29.4%
• Yields +71 bps to 5.8% NEY: Campuses +70 bps to 5.0%, Retail and London Urban Logistics +72 bps to 6.8%
• Values down 12.3% with Campuses down 13.1% and Retail & London Urban Logistics down 10.9%; outperformed MSCI by 310 bps
• EPRA Net Tangible Assets (NTA) down 19.5% to 588p and Total Accounting Return of –16.3%

Developments

• High quality development pipeline to deliver 11.8m sq ft with £1.7bn of profit to come
• On site with 1.8m sq ft of net zero carbon developments across our Campuses; 94% of costs fixed for committed developments

Capital activity

• Sales of £746m mainly the sale of 75% of majority of Paddington Central crystallising total property returns of 9% p.a.
• Acquired £203m of retail parks, life sciences and London Urban Logistics assets at attractive prices

Balance sheet

• Financing of £1.4bn (£515m H1, £875m H2) on favourable terms, at margins in line with in place facilities
• Strong liquidity, £1.8bn of undrawn facilities, no requirement to refinance until early 2026
• Group Net Debt to EBITDA 6.4x², proportionally consolidated Net Debt to EBITDA 8.4x and LTV 36.0% (FY22: 32.9%)
• Weighted average interest rate 3.5%; debt 97% hedged for FY24, with 76% of projected debt hedged on average over the next 5 years
• Fitch affirmed our senior unsecured credit rating at ‘A’ with stable outlook

Sustainability

• Portfolio well on track to be compliant with 2030 legislation, with 45% rated EPC A or B up from 36% as at 31 March 2022
• 5 star GRESB rating on Developments and 4 star GRESB rating on Standing Investments
• Created a £25m Social Impact Fund to provide education, employment and affordable space in the communities in which we operate

Outlook

• ERV guidance, next 12 months: 2-4% growth in Campuses, 2-4% growth in Retail Parks and 4-5% in London Urban Logistics
• Upward yield pressure appears to be easing and there are early signs of yield compression for retail parks.

Summary performance

¹ The growth in the dividend is lower than the Underlying EPS growth due to the impact of the rental concession restatement in the prior year.
² Net Debt to EBITDA on a Group basis excludes non-recourse and joint venture borrowings, and includes distributions from non-recourse companies and joint ventures.
³ Prior year comparatives have been restated for a change in accounting policies in respect of rental concessions and tenant deposits (as disclosed in Note 1 of the condensed financial statements).
⁴ See Note 2 to the condensed financial statements for definition and calculation.
⁵ Valuation movement during the year (after taking account of capex) of properties held at the balance sheet date, including developments (classified by end use), purchases and sales.
⁶ See Note 14 to the condensed financial statements for definition, calculation and reference to IFRS metrics.
⁷ EPRA Loan to value is disclosed in Table E of the condensed financial statements.

Results Presentation and Investor Conference Call

A presentation of the results will take place at 9.00am on 17 May 2023 at Peel Hunt, 100 Liverpool Street, Broadgate and will be broadcast live via webcast (Britishland.com) and conference call. The details for the conference call and weblink are as follows:

A dial in replay will be available later in the day for 7 days. The details are as follows:

Accompanying slides will be made available at Britishland.com just prior to the event starting.

For Information Contact