British Land : Preliminary results announcement for the year ended 31 March 2024

F U L L Y E A R R E S U L T S F O R T H E Y E A R T O 3 1 M A R C H 2 0 2 4

22 May 2024

STRATE GY DE LIVERING: STRONG RENT AL GROWT H, ST ABLE VALU E S IN H2

Simon Carter, CEO said:

"Our strategy of focusing on campuses, retail parks and London urban logistics is delivering.

ERV growth accelerated to 5.9%, exceeding our guidance in all sectors. We outperformed the MSCI benchmark by 300 basis points and values were stable in the second half. Our operational momentum continues with high occupancy, strong leasing and good cost discipline driving Underlying Profit growth of 2%.

We have achieved much this year - the surrender and joint venture of 1 Triton Square, the commitment to 2 Finsbury Avenue following the record breaking pre-let to Citadel, and the sale of Meadowhall are all good examples of our active approach to capital recycling. As a result, 93% of our portfolio is now in our chosen markets.

Although the geopolitical and economic landscape remains uncertain, with a portfolio net equivalent yield over 6%, 3-5% forecast rental growth and development upside, we expect to generate attractive future returns."

F I N A N C I A L

• Underlying Profit of £268m up 2%
• EPRA cost ratio 16.4% vs 19.5% in FY23
• Underlying earnings per share of 28.5p up 1%
• Dividend per share of 22.8p up 1%

B A L A N C E S H E E T

• EPRA Net Tangible Assets per share of 562p down 4.4% in the year
• Pro forma Loan To Value 34.6%1 and FY24 Loan To Value at 37.3% (FY23 36.0%)
• Pro forma Group Net Debt to EBITDA1 6.4x and FY24 Group Net Debt to EBITDA 6.8x (FY23 6.4x)
• Fitch Senior Unsecured credit rating at 'A' with stable outlook (affirmed August 2023)
• £1.9bn undrawn facilities and cash, with £1bn of financing activity in the year
• Interest rate on our debt fully hedged for FY25 and 86% hedged on average over the next five years

C A P I T A L A C T I V I T Y

• Disposal proceeds in FY24 of £410m, 11% above book value on average
• Sale of 50% stake in Meadowhall Shopping Centre to Norges for £360m, expected to complete in July 2024
• Acquisition of Westwood Retail Park, Thanet for £55m at a net initial yield of 8.1%

O P E R A T I O N A L M E T R I C S

• Portfolio occupancy 97%2: Campuses 96%2, Retail Parks 99%, London Urban Logistics 100%
• Leased 3.3m sq ft, 15.1% ahead of ERV
• Campus leasing 679,000 sq ft, 8.7% ahead of ERV; a further 316,000 sq ft signed since 31 March 2024, 13.1% ahead of ERV
• Campus under offers as of 17 May 2024, 544,000 sq ft, 9.3% ahead of ERV, with a further 806,000 sq ft in negotiations
• Retail & London Urban Logistics leasing 2.6m sq ft, 17.8% ahead of ERV, and 493,000 sq ft under offer, 17.9% ahead of ERV

P O R T F O L I O V A L U A T I O N

• ERV growth of 5.9%: Campuses 5.4%, Retail Parks 7.2%, London Urban Logistics 10.0%
• NEY3 +33bps to 6.2%: Campuses +50 bps to 5.5%, Retail Parks +12 bps to 6.7%, London Urban Logistics +24 bps to 4.9%
• Values -2.6%: Campuses -5.3%, Retail Parks +2.7% and London Urban Logistics +3.7%
• H2 values -0.2%: Campuses -1.5%, Retail Parks +2.5% and London Urban Logistics +3.1%
• Outperformed MSCI All Property total return benchmark by 300 bps, and 800 bps on a sector weighted basis

S U S T A I N A B I L I T Y

• GRESB rating of 5* for both Standing Investments and Developments
• 58% of the portfolio rated EPC A or B, up from 45% at FY23, and we expect to increase to around 64% in FY254
• New 2030 Social Value Target to generate £200m of direct value of which 50% is social and 50% is economic

O U T L O O K

• FY25 ERV guidance of 3-5% growth in each of our markets
• Comfortable with market expectations for FY25 Underlying EPS of 27.9p
• Expect committed and recently completed developments5 to deliver 4.5p of EPS, of which 2.6p will be in FY26

1. Proportionally consolidated LTV and Group Net Debt to EBITDA pro forma for the sale of our 50% stake in Meadowhall Shopping Centre contracted to complete in July 2024
2. Occupancy excludes recently completed developments at Norton Folgate and 3 Sheldon Square
3. Net Equivalent Yield
4. Measured by ERV
5. Committed (including post period end commitment of 2 Finsbury Avenue) and completed developments including near term development of 1 Triton Square

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S U M M A R Y P E R F O R M A N C E

	31 March	31 March
Year ended	2024	2023	% Change
INCOME STATEMENT
Underlying Profit1	£268m	£264m	2%
Underlying earnings per share1	28.5p	28.3p	1%
IFRS profit (loss) after tax	£1m	£(1,039)m
IFRS basic earnings per share	(0.1)p	(112.0)p
Dividend per share	22.80p	22.64p	1%
Total accounting return1	(0.5)%	(16.3)%
	31 March	31 March
As at	2024	2023
BALANCE SHEET
Portfolio at valuation (proportionally consolidated)	£8,684m	£8,898m	(2.6)% 2
EPRA Net Tangible Assets per share1	562p	588p	(4.4)%
IFRS net assets	£5,312m	£5,525m
Net Debt to EBITDA (Group)3, 4	6.8x	6.4x
Loan to value (proportionally consolidated)4, 5	37.3%	36.0%
Senior Unsecured credit rating	A	A
	31 March	31 March
Year ended	2024	2023
OPERATIONAL STATISTICS
Lettings and renewals over 1 year	2.8m sq ft	2.6m sq ft
Total lettings and renewals	3.3m sq ft	3.4m sq ft
Committed and recently completed developments	2.8m sq ft	1.8m sq ft
SUSTAINABILITY PERFORMANCE
MSCI ESG	AAA rating	AAA rating
GRESB (Standing Investments / Developments)	5* / 5*	4* / 5*

1. See Note 2 to the condensed financial statements for definition and calculation
2. 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, sales and surrender premium received at 1 Triton Square
3. Net Debt to EBITDA on a Group basis excludes non-recourse and joint venture borrowings and includes distributions and other receivables from non-recourse companies and joint ventures
4. See Note 2 to the condensed financial statements for definition, calculation and reference to IFRS metrics
5. EPRA Loan to value is disclosed in Table E of the condensed financial statements

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R E S U L T S P R E S E N T A T I O N A N D I N V E S T O R C O N F E R E N C E C A L L

A presentation of the results will take place at 8.30am on Wednesday 22 May 2024 at Peel Hunt, 100 Liverpool Street, Broadgate and will be broadcast live via webcast (www.britishland.com) and conference call. The details for the conference call and weblink are as follows:

UK Toll Free Number:	0800 358 1035
International:	[phone]
Access code:	238950
Click for access:	Audio weblink

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

Replay number:	020 3936 3001
Passcode:	867542

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

F O R I N F O R M A T I O N C O N T A C T

I N V E S T O R S
Sandra Moura, British Land	07989 755535
M E D I A
Charlotte Whitley, British Land	07887 802535
Guy Lamming/Gordon Simpson, FGS Global	020 7251 3801
	[e-mail]

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CHIEF EXECUTIVE'S REVIEW

O V E R V I E W

Our strategy of focusing on campuses, retail parks and London urban logistics is delivering.

ERV growth accelerated to 5.9% in the year, exceeding our guidance in all sectors and resulting in an outperformance of the MSCI All Property total return benchmark by 300 basis points (bps). Increases in market interest rates in the first half of the year caused property yields to move out, impacting our portfolio values which declined by 2.6% over the year. However, in the second half of the year the pace of yield expansion slowed significantly with values down only 0.2%, as a 10 bps increase in yields was offset by 2.6% rental growth.

Our operational momentum continued, with strong leasing, additional fee income and tight cost control offsetting the temporary dilutive impact on earnings of buildings moving into development, resulting in 2% Underlying Profit growth. Leverage is well within our target range, especially at this stage in the cycle.

We are pleased with our capital activity this year, which included the 1 Triton Square surrender and recent joint venture with Royal London Asset Management (Royal London), as well as the commitment to develop 2 Finsbury Avenue following its pre-let at record breaking rents to Citadel Securities (Citadel). We have sold Meadowhall 3% ahead of book value and plan to reinvest the proceeds into retail parks. They provide an attractive day one cash yield given their low capex requirements, and at 99% occupancy, our parks are delivering strong rental growth.

With a portfolio Net Equivalent Yield (NEY) of 6.2%, plus 3-5% expected rental growth and development upside we expect to generate attractive earnings growth and deliver 8-10% total accounting return per annum over the medium term.

O P E R A T I O N A L U P D A T E

The operational momentum we reported in FY23 continued in FY24, with adjusted occupancy at 97%5 and 3.3m sq ft of leasing, 15.1% ahead of ERV. Since 31 March we signed a further 316,000 sq ft on our campuses, 13.1% ahead of ERV and as of 17 May 2024 under offers were 544,000 sq ft, 9.3% ahead of ERV, with a further 806,000 sq ft in negotiations. Key deals included regears with Monzo Bank, Skidmore Owings & Merrill, and a 252,000 sq ft pre-let to Citadel at 2 Finsbury Avenue on our Broadgate campus. In retail, we had another record year of leasing with new lettings and renewals to a wide range of retailers including Sports Direct, Marks & Spencer, Primark, Next, H&M and ASDA. In London urban logistics there were successful regears at Wembley and Enfield.

Our campuses are located close to major transport nodes and have great amenities, high quality sustainable buildings, and allow occupiers to grow and cluster close to other businesses. Demand for this kind of best-in-class workspace remains strong, and as a result, vacancy across our campuses was 4%5 compared to 9% in the wider London office market.6 This resulted in 5.4% ERV growth on our campuses, significantly above our guided range of 2-4%.

We also continue to see strong demand for our retail parks due to their affordability, adaptability and accessibility. Underlying vacancy on our retail parks is 1% compared to the UK retail market vacancy of 14%.7 ERV growth in the year was 7.2%, also significantly above our guided range of 3-5%.

Our urban logistics portfolio is focused on densification and repurposing opportunities in London. Demand is driven by the continued rise of e-commerce, the growth of priority delivery services and the beneficial impact central facilities have on transport costs, carbon emissions and pollution. Supply is constrained which has resulted in an underlying vacancy of 0.2% in our assets compared to 7.2% for the UK big box market.8 This supply and demand imbalance drove ERV growth of 10%, materially above our guided range of 4-5%.

S T R A T E G Y

In 2021 we set out a value-add strategy focused on three segments with the strongest operational fundamentals - campuses, retail parks and London urban logistics. In FY24 we outperformed MSCI All Property total return benchmark by 300 bps, and on a reweighted basis to match the British Land portfolio composition at the sector level the outperformance was 800 bps. This was driven by strong ERV growth in campuses and retail parks. We are delivering this outperformance versus the market because we have deep development and asset management capabilities, continue to execute well, and are in the best parts of the market.

C A M P U S E S

Best-in-class workspace

The pandemic led most companies to re-evaluate what they wanted from their workspace - their conclusion: higher quality space to attract and retain talent. Alongside this, we identified that science and technology was likely to be a key growth driver of the UK economy over the

1. Occupancy excludes recently completed developments at Norton Folgate and 3 Sheldon Square
2. CBRE
3. Local Data Company
4. Savills: >100,000 sq ft UK

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next decade, particularly in the Golden Triangle of London, Oxford and Cambridge. In 2021, we set about reshaping our office business around these trends.

At the centre of this is our very successful campus model. Our campuses provide the great amenity, transport connectivity, public realm and high quality, sustainable buildings that businesses are seeking post-pandemic. They are also ideal for the clustering and collaboration, which is key to science and technology businesses.

Although hybrid working is here to stay, based on a 350m sq ft sample of global office space, CBRE found that peak office utilisation in London is high, in line with Singapore and Hong Kong, at 80% of max capacity in line with pre-covid, and ahead of Paris, New York, Boston, and Silicon Valley.9 We are seeing a similar trend on our own campuses, where peak utilisation increased 17% year on year.10

In the past four years, the market has seen a bifurcation in the dynamics between best-in-class and secondary space. Although overall market vacancy is 9%, vacancy for best-in-class new space is 1%.9 Because of the long timelines required to develop buildings, there is little to no supply in the best locations. Projects were put on hold or cancelled during the pandemic and in the years thereafter as inflation pushed up construction costs, and rising interest rates created uncertainty around cost of capital and exit yields.

Over the next four years, the average annual development pipeline in the City is only 1.3m sq ft compared to the 10-year annual average take up of new or substantially refurbished workspace of 2.1m sq ft per year which we expect to increase given the trend to upgrade.11 In fact, under offers in the City are at the highest level in the last 24 years and 54% ahead of the 10-year average.9 This supply demand imbalance is driving strong rental growth. On our campuses, ERV increased by 5.4% in FY24, and Cushman & Wakefield expect rents for super prime space in the City to grow at c.8% per annum for the next four years.

Given these strong occupational fundamentals, we recently committed to a new 750,000 sq ft development at 2 Finsbury Avenue on our Broadgate campus, where occupancy is 98%. 2 Finsbury Avenue is currently the only significant committed new development in the City to be delivered in 2027.11 This iconic scheme will have a unique podium and dual tower design, incorporating state of the art, highly sustainable workspace with expected BREEAM Outstanding, WELL Platinum, EPC A and a NABERS 5-star ratings. In April 2024, we signed a pre-let with hedge fund and financial advisory firm Citadel to lease 252,000 sq ft of workspace, with options to lease up to another 128,000 sq ft. The deal means that at the point of commitment the building is 33% pre-let at a minimum, and 50% pre-let if the option space is taken.

2 Finsbury Avenue is expected to deliver attractive returns with a forecast yield on cost of 7%, profit on cost above 20%, and a mid-teens IRR (above our target range of 12-14%). Together with GIC, our joint venture partners at Broadgate, we are exploring several capital recycling options, including bringing in an additional partner at 2 Finsbury Avenue to share risk and cost and to accelerate these returns.

Supply of best-in-class workspace will increase to meet demand in due course, and some occupiers may settle for lesser quality space and locations due to price, availability or the need for certainty. Nevertheless, there is a window of opportunity to generate attractive returns over the next three to four years, given the strong demand and long lead times to develop (or convert) space to the high standards of design, sustainability and in the locations that occupiers now favour.

Science and Technology

Targeting fast growing customers is a core part of our campus strategy. The science and technology sector currently represents around 15% of the UK economy and is expected to continue to grow rapidly.12 The UK's leading position in AI and data sciences is also accelerating the pace of scientific discovery across a broad universe which includes life sciences but also green sciences, physical sciences, and technology. The UK benefits from a strong ecosystem of academic and research institutions and deep pool of talent, particularly, in The Golden Triangle (London, Oxford and Cambridge).

In London this growth is concentrated in the Knowledge Quarter where economic output between 2011 and 2019 increased by 7% per annum.13 This increase in economic activity combined with a limited supply of best-in-class office space has resulted in rental growth in the Knowledge Quarter of 7% per annum.13 In Cambridge, where employment growth was 3.5% per year over the last 6 years, vacancy for lab fitted space is less than 3%.14

Our campus proposition is ideally suited for this sector as it allows businesses to cluster and have the serendipitous encounters that are so important in science and technology. We already provide space, services and amenities for customers at different maturity stages from start-ups, through scale-ups to global HQ space. In addition, most of our office buildings are well suited to lab conversion. That's because they are modern, with good power, ventilation and slab-to-slab heights.

Our operational platform is also a competitive advantage. Storey, our flexible office proposition, is now six years old. Whilst there are important differences, we've found the operational experience running Storey has been invaluable as we've rolled out enabled, fitted and serviced labs to smaller occupiers on shorter leases.

1. CBRE
2. April 2023 to April 2024
3. Cushman & Wakefield
4. Oxford Economics GVA
5. Metro Dynamics
6. Cambridge Ahead

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How material can science and technology customers be to British Land? Our plan will flex based on demand and returns. Today, science and technology occupiers represent over 20% of our campus footprint. This could increase to around 50% by 2030 based on our 2m sq ft innovation pipeline, and while labs will be an important part of a campus like Regent's Place, they may only represent around 15% of our science and technology space.

We are targeting science and technology occupiers at our campuses at Regent's Place, Canada Water and the Peterhouse campus in Cambridge. Regent's Place is a 13 acre campus located in the heart of London's Knowledge Quarter, which is home to leading research institutions including The Francis Crick Institute (The Crick), The Wellcome Trust, The Alan Turing Institute and University College London. It is well placed to benefit from its privileged location within this well-established innovation ecosystem. At Canada Water we have 53 acres of well-connected space and are at the early stages of creating a new cluster with the delivery of our modular lab space. In Cambridge, the Peterhouse campus, is a 14 acre campus, part of which is let to ARM. In the first half of the year, we committed to the development of the newest part of the site, The Optic, a 96,000 sq ft office and lab building which will be delivered in 2025 into a highly constrained market.

Networks are critical to success in science and technology and we are becoming the real estate partner of choice in the Golden Triangle. We recently announced a collaboration with The Crick. The first phase will be to fit out and operate a 30,000 sq ft serviced lab offer at 20 Triton Street at Regent's Place, which is due to be delivered by the end of 2024. The Crick will bring a pipeline of customers and its operational expertise to help create a first of its kind facility in London, providing highly serviced fitted lab and office space with shared facilities for customers, as well as access to The Crick's scientific expertise.

This collaboration builds on the Memorandum of Understanding with University College London (UCL) signed in May 2023, which gives our occupiers access to UCL's technical services and facilities and creates the opportunity for British Land to support the growth of UCL spin outs. These partnerships further consolidate Regent's Place as an outstanding science and technology hub.

We recently announced a joint venture with Royal London at 1 Triton Square at Regent's Place. It will be a world class science and technology building with a highly flexible design, offering a mix of fitted and lab enabled space as well as the potential to incorporate serviced offices to accommodate flexible requirements at the lower levels, whilst retaining best-in-class office space on upper floors. The joint venture enables us to accelerate returns and is an example of how we actively recycle capital. British Land received gross proceeds of £193m from the sale of a 50% share of the building, in addition to a £149m surrender premium already received from Meta. The combination of the surrender premium, joint venture formation and subsequent fit out and leasing is expected to deliver an IRR over 30%.

R E T A I L P A R K S

The second strand of the strategy we set in 2021, was to grow our exposure to retail parks. We could see from our leasing activity that retail parks had become the preferred physical retail format for an increasing number of retailers due to the three "A's" - affordability, accessibility and adaptability. The affordability of retail property is generally assessed by the occupancy cost ratio - rent, rates and service charge as a percentage of total sales. A combination of reduced rents, lower business rates, already low service charges and robust sales reduced this ratio from 17.7% in 2016 to 8.9% now - at this level a very broad range of retailers can trade profitably. Retail parks are highly accessible for consumers as they are typically located on major arterial roads on the outskirts of towns and cities with ample free carparking. This makes them ideal not only for shopping, but for click and collect, returning goods to store and increasingly shipping from store. The adaptability of a retail park unit is an important feature for retailers who face significant challenges in remodelling stores on the high street and in shopping centres.

These occupational fundamentals combined with low capital expenditure requirements, which are around half of that of shopping centres, and pricing below replacement cost make retail parks an attractive investment.15 Consequently, we have been increasing our exposure to parks and have invested £410m since 2021 at an attractive blended yield of 7.8%. Over the last three years retail parks have been the best performing subsector in UK real estate, and we delivered a total property return of 11.6% per annum, outperforming the wider retail park sector by 440 bps.

We are sometimes asked whether the outperformance of retail parks is just an overhang from Covid because they are open air and were perceived to be safer to visit. Our view is that it is a permanent structural shift driven by the three "A's" above. Affordability is driving incremental demand from discounters and essential retailers and accessibility and adaptability are key for the multichannel retailers. This is borne out by statistics on UK store closures and openings. Since 2016 there have been net closures of -4,327 and -1,195 on the high street and within shopping centres respectively, but +615 net store openings at retail parks, reflecting this incremental demand.16

L O N D O N U R B A N L O G I S T I C S

Our urban logistics strategy is to deliver new space in London by repurposing assets, like the Finsbury Square carpark, or densifying existing industrial land with multistorey schemes like our Mandela Way scheme in Southwark. Strong demand is underpinned by the growth of e- commerce and rising customer expectations on the speed and convenience of deliveries. Occupiers want to optimise their distribution operations and lower costs, while at the same time reducing their carbon footprint and pollution by using e-bikes and e-vehicles for the last mile logistics. Over the last two decades, significant amounts of industrial space in London have been converted to other uses, which combined with strong demand has led to very low vacancy of 0.8% in inner London.17 This backdrop plays well to our planning expertise and

1. Capex is 12% of net rental income for retail parks compared to 21% at covered centres (MSCI five-year average)
2. Local Data Company
3. Savills

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track record of delivering complex developments in London. Our London urban logistics development pipeline has a gross development value of £1.5bn.

During the year we have received planning consents for our schemes at The Box in Paddington, Mandela Way in Southwark, Thurrock and Heritage House in Enfield. We also submitted plans for approval of our scheme in Verney Road in Southwark. Although exit yields and construction costs are higher, returns still look strong as we have been able to mitigate these headwinds by increasing the massing of schemes and rents have grown faster than expected.

C A P I T A L A L L O C A T I O N

Actively recycling capital is an important way we create value. We dispose of non core and dry assets and redeploy capital into opportunities with higher returns, namely retail parks acquisitions and our development pipeline in campuses and London urban logistics. We also use joint ventures to accelerate returns, stretch our equity, share risk and earn attractive fees.

Since we launched our new strategy, capital activity totalled £3.5bn, of which £1.7bn were offices sold at an average yield of 4.5%. We have reinvested proceeds into developments, an early re-entry into retail parks in 2021 and our London urban logistics pipeline. These transactions have reshaped our portfolio which is now 93% focused on our chosen sectors of campuses, retail parks and London urban logistics and we will continue to actively recycle capital as we see opportunities to create value.

In FY24, disposals totalled £410m from assets sold at 11% above book value on average. These transactions include the joint venture with Royal London to accelerate returns and share risk at 1 Triton Square as well as disposing of non core assets including an office and data centre portfolio. On 20 May 2024 we announced the sale of our 50% stake in Meadowhall Shopping Centre (Meadowhall) to our partner Norges Bank Investment Management (Norges) for £360m. This follows the sale of some ancillary land for £7m (British Land share) earlier this year. Together these deals value the entirety of the Meadowhall Estate at £734m, 3% above the September 2023 book value.

As we continue to recycle capital, our priorities for capital allocation remain unchanged. The resilience of our balance sheet is of utmost importance as it gives the ability to navigate macroeconomic uncertainties and the flexibility to invest in opportunities as they arise. Our pro forma LTV including the sale of Meadowhall is 34.6%, with FY24 at 37.3% (FY23 36.9%). Pro forma Group Net Debt to EBITDA was 6.4x, with FY24 at 6.8x (FY23 6.4x), with £1.9bn of undrawn facilities and cash at 31 March 2024. In August 2023, Fitch affirmed our Senior Unsecured credit rating at 'A' with stable outlook.

We will continue to buy retail parks opportunistically. They have strong occupational fundamentals, values below replacement costs, attractive yields and are earnings accretive upon acquisition. Developments have created significant value for us over the years and we have adjusted our return and yield on cost requirements to reflect the higher interest rate environment, which has also increased exit yields and finance costs. Our pipeline is focused on campuses and London urban logistics, both subsectors where the supply of new schemes is constrained. As a result, we are securing higher than expected rents, which combined with construction costs levelling off, is resulting in returns above our investment hurdles. This year we committed to The Optic, a lab enabled building at our Peterhouse campus in Cambridge and Mandela Way, a multistorey urban logistics scheme in Southwark. More recently we committed to 2 Finsbury Avenue, a best-in-class office scheme on our Broadgate campus.

We also remain committed to shareholder distributions. Our dividend policy is to pay 80% of underlying EPS and we consider other shareholder distributions as and when appropriate.

S U S T A I N A B I L I T Y

We have made good progress against our Sustainability Strategy in FY24. The percentage of the portfolio which is rated EPC A or B increased to 58%, up from 45% at FY23, and is expected to increase to around 64% in FY25.18 We expect to meet the proposed Minimum Energy Efficiency Standard of EPC 'B' by 2030, the cost of this is estimated to be around £100m, of which two thirds will be recovered through the service charge. Since FY19 we have spent a cumulative £18m on these initiatives, 63% of which has been recovered via the service charge.

We are a global leader in sustainable development, retaining our GRESB 5* rating and achieving a score of 99/100, whilst our standing investments achieved a rating of 5* up from 4* in FY23. We have also achieved Living Wage accreditation. We recognise that people are key to the success of our business and have always paid at least the real Living Wage to our direct employees and across our developments. The accreditation reflects the work we have done in recent years to encourage our supply chain to do the same.

Another highlight during the year was the introduction of a new social value target to generate £200m of direct value by 2030 of which 50% is social value and 50% is economic value. We will target an additional £100m of indirect social value. These targets provide a financial value to the outcomes of our social sustainability programmes and further embed social impact into everything we do. Progress will be reported annually, providing a clear and transparent methodology that demonstrates how the social and economic impact is quantified.

18 Measured by ERV

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B O A R D

During the year we have had a series of changes to the Board. William Rucker has been appointed as Chair Designate to succeed Tim Score who will step down after the 2024 AGM after 10 years on the Board and five years as Chair. I would like to thank Tim for his excellent advice and support during his tenure as Chair and welcome William, whose experience and insights will be very valuable as we continue to execute our strategy.

I would like to extend a warm welcome to Amanda Mackenzie, Mary Ricks and Amanda James who have been appointed as independent Non-Executive Directors. The Board will benefit hugely from the depth and breadth of their experience. I would also like to thank Laura Wade-Gery for her significant contribution; she will step down as Non-Executive Director in July at the 2024 AGM after nine years on the Board and we wish her well in her future endeavours. Amanda Mackenzie will become Chair of the Remuneration Committee at the conclusion of the 2024 AGM.

O U T L O O K

In the past 12 months macroeconomic and geopolitical uncertainty has remained high. However, inflation has declined, and markets are now anticipating interest rate cuts. Consequently, yield expansion in the portfolio slowed significantly in the second half and strong rental growth meant values were broadly flat.

Our base case is that we will be operating in a more supportive economic environment over the next 12 months than we have seen in the last two years. With inflation lower, the next move in the base rate is likely to be down rather than up and although UK GDP growth is expected to be modest at best, most forecasts are for it to be positive. Unemployment is expected to remain low which should be supportive of demand for best-in-class workspace at our campuses as businesses continue to focus on attracting and retaining talent in a competitive jobs market. The return of real wage growth should provide valuable breathing space for consumers, supporting our retail parks business.

The momentum we are seeing in the business combined with strong occupational fundamentals underpin our ERV guidance of 3-5% in each of our markets.

We recognise geopolitical risk remains elevated, but we take comfort from our strong operational performance over the last 24 months. With a portfolio NEY of 6.2%, strong rental growth prospects and development upside we expect to deliver 8-10% total accounting return per annum over the medium term.

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MA RK ET

L O N D O N O F F I C E M A R K E T

Take up over the last year for new and refurbished space in core Central London was 12% ahead of the 10-year average, even though take up of all space across London was 13% behind the 10-year average.19 The forward-looking indicators are also encouraging with under offers, a key measure of demand, in core Central London significantly increasing at the start of the year to 3.2m sq ft, 24% above the 10-year average.19 Furthermore, active demand in Central London is at 13m sq ft, 37% above the 10-year average and super prime deals are 36% above.20 The picture is even more positive in the City, with under offers on all space at the highest level in 24 years at 2.2m sq ft, 54% ahead of the long term average.21

Supply is constrained across London, with vacancy for the best space and the rest continuing to diverge. Vacancy for new or refurbished space in core Central London is at 1%, while vacancy for second hand space outside of core Central London is 11%.19 This is also true of the City submarket, with average expected annual development completions of 1.3m sq ft per annum from 2024 to 2027 compared to the 10- year average annual take up of 2.1m sq ft.20 The result is that we are seeing strong rental growth for super prime (top 10% of space) in the City, with Cushman & Wakefield forecasting super prime rents in the City to grow by c.8% per annum over the next four years.20

Investment markets were subdued. Total volumes were £6bn across the City and West End compared to c.£10bn last year. There has been an uptick in West End investment volumes in H2, however City investment levels remain low.

S C I E N C E & T E C H N O L O G Y M A R K E T

The Golden Triangle of London, Oxford and Cambridge remains the focus for science and technology occupiers and the current demand supply imbalance for lab space continues to drive rents in these locations. Take up of offices and labs in Oxford and Cambridge and science related take up in London was 1.4m sq ft, 739,000 sq ft of which was for lab space.22 Demand is strong, with active requirements for science and innovation space in the Golden Triangle totalling 1.5m sq ft.22 Although supply has been highly constrained historically, there is a more significant development pipeline coming through in some locations.

Investment volumes in the year were very low with £0.4bn of space transacted in the year compared to £2.1bn last year.

R E T A I L P A R K M A R K E T

Occupational markets have been strong in the year as the consumer remained resilient. Retail parks continue to perform very well with 697 new unit openings recorded in 2023 (calendar year), exceeding the five-year average total of 667 new openings.23 Vacancy rates on parks remain very low due to increased demand from retailers who prefer the format due to the affordability, accessibility and adaptability, coupled with limited supply coming through.

Investment volumes in the year were £1.7bn, down from £3.2bn last year.

U R B A N L O G I S T I C S M A R K E T

In London, take up in the year was 0.9m sq ft, tracking below 2022 take up of 1.5m sq ft, as businesses have taken more time to consider larger capital investment in new properties.25 Rents continue to grow, reflecting the strength of demand for very centrally located space driven by the growth of e-commerce and increased expectations for priority delivery and lack of available stock, particularly in London. As a result, inner London vacancy is 0.8%.22

Investment volumes in the year were £7.2bn, down from £8.4bn last year.

1. CBRE: Core Central London defined as City and West End (Paddington to Victoria, excluding Midtown)
2. Cushman & Wakefield
3. CBRE
4. Savills
5. Local Data Company

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F U L L Y E A R R E S U L T S

BUSINESS REVIEW

K E Y M E T R I C S

	31 March	31 March
Year ended	2024	2023
Portfolio valuation	£8,684m	£8,898m
Occupancy1	97.2%2	96.7%
Weighted average lease length to first break	5.2 yrs	5.7 yrs
Total property return	2.0%	(9.5)%
- Yield shift	+33 bps	+71 bps
- ERV movement	5.9%	2.8%
- Valuation movement	(2.6)%	(12.3)%
Lettings/renewals (sq ft) over 1 year	2.8m	2.6m
Lettings/renewals over 1 year vs ERV	+15.1%	+15.1%
Gross capital activity3	£869m	£1,225m
- Acquisitions	£55m	£148m
- Disposals	£(410)m	£(729)m
- Capital investment	£404m	£348m
Net investment/(divestment)	£49m	£(233)m

On a proportionally consolidated basis including the Group's share of joint ventures and excluding non-controlling interests

1. Where occupiers have entered CVA or administration but are still liable for rates, these are treated as occupied. If units in administration are treated as vacant, then the occupancy rate would reduce to 96.8%, excluding recently completed developments
2. Occupancy excludes recently completed developments at Norton Folgate and 3 Sheldon Square
3. Excludes the sale of Meadowhall Shopping Centre post year end

P O R T F O L I O P E R F O R M A N C E

		Valuation			Total property	Net equivalent
	Valuation	movement	ERV movement	Yield shift	return	yield
At 31 March 2024	£m	%	%	bps	%	%
Campuses	5,278	(5.3)	5.4	+50	(2.3)	5.5
Central London	4,613	(4.9)	5.6	+50	(1.8)	5.5
Canada Water & other Campuses	514	(13.1)	(0.2)	+46	(12.4)	6.0
Retail & London Urban Logistics	3,406	2.1	6.3	+15	9.6	7.0
Retail Parks	2,128	2.7	7.2	+12	10.0	6.7
Shopping Centres	753	0.8	5.2	+19	10.8	8.1
London Urban Logistics	313	3.7	10.0	+24	6.5	4.9
Total	8,684	(2.6)	5.9	+33	2.0	6.2

See supplementary tables for detailed breakdown

The value of the portfolio was down 2.6% driven by yield expansion of 33 bps across the portfolio. There has been a notable slowdown in outward yield shift in H2 of 10 bps, compared to H1 where yields moved out by 23 bps. This was partly offset by positive ERV growth of 5.9%, with positive ERV movement across all major subsectors.

Campus valuations were down 5.3% over the year but this decline slowed to -1.5% in H2 compared to -4.0% in H1. The value of our West End portfolio was down 2.5% and City portfolio down 6.9%, reflecting yield expansion of 52 bps and 48 bps respectively. While investment markets continue to see low levels of transactions, there continues to be strong occupational demand for new, best-in-class buildings, located next to transport hubs with strong sustainability credentials. This has led to ERV growth of 5.4% across campuses, with 7.1% and 4.2% ERV growth in our West End and City office portfolio respectively, reflecting leasing activity and limited supply.

The value of our retail park portfolio is up 2.7% in the year, with strong ERV growth of 7.2%, driven by occupier demand and high occupancy on our parks, offsetting marginal outward yield shift of 12 bps. Yields in H2 stabilised.

The value of our shopping centres was marginally up by 0.8% with a 5.2% increase in ERV offsetting yield expansion of 19 bps. London urban logistics values increased by 3.7%, with a significant increase in ERV of 10.0% offsetting outward yield shift of 24 bps.

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