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 Property Review Commercial Property Market Summary Principal Investment Properties Joint Ventures Review Valuation Certificate Intruction to Valuers |
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Joint Ventures ReviewIntroductionBritish Land has 12 active joint ventures which hold £2.4 billion (2003: £2.8 billion) of properties in the principal areas of retail, office and development. British Land’s share of £1.2 billion (2003: £1.4 billion), is financed to the extent of £530 million (2003: £632 million) by external net debt, without recourse to British Land (2003: £12 million guaranteed). The net investment in joint ventures at the year end is £658 million (2003: £700 million).Joint venture modelAll British Land’s joint ventures share a common framework:
Joint venture rationaleJoint ventures benefit British Land because:
Joint venture activityThe key activities of the joint ventures during the year were:
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The Scottish Retail Property Limited PartnershipJV Partner: Land Securities Group PLCDate established: March 2004 Portfolio value: £487m, comprising shopping centres in Aberdeen and East Kilbride. Annualised net rent: £30m Finance: No external finance Value of British Land net investments: £252m The joint venture properties comprise over 130,000 sq m (1.4 million sq ft) of retail space in major shopping centres: St Nicholas Centre and Bon Accord Centre, Aberdeen and Centre West, Plaza Centre, The Olympia and Princes Mall, East Kilbride. The Partnership will produce a joint development plan for the centres to provide an enhanced environment for both shoppers and retailers. The partners will increase their ability to attract and service high quality tenants and maximise the long-term value of the centres.
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Joint ventures with Tesco PLCBritish Land has three joint ventures with Tesco PLC, which together own £798 million of retail properties, comprising 13 superstores, four retail parks and four shopping centres anchored by Tesco stores.BLT PropertiesJV Partner: Tesco PLCDate established: November 1996 Portfolio value: £254m, comprising two retail parks and eight Tesco superstores Annualised net rent: £15m Finance: £185m loan provided by a syndicate of banks, without recourse to the joint venture partners Value of British Land net investment: £44m One of the first joint ventures, BLT has been active in extending the properties, increasing the investment by making capital contributions to the cost of development, and achieving increases in rental income. During the year, the extension programme has continued; it is anticipated that the extension at Formby will be completed shortly. Extension and development options are being evaluated on four further stores. In November 2003, the joint venture reached the end of its initial seven year term and was renewed for a further seven years. The leases to Tesco were all extended by an additional ten years, now to expire after 2030. The joint venture was also refinanced with a new term loan of £185 million to repay the previous bank loan of £110 million and the surplus was returned to the shareholders.
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Tesco British Land Property PartnershipJV Partner: Tesco PLCDate established: February 1998 Portfolio value: £129m, being two shopping centres anchored by Tesco Annualised net rent: £9m Finance: £87m loan from Danske Bank A/S, with recourse only to the partnership assets Value of British Land net investment: £15m The partnership with Tesco was originally established to acquire 12 retail properties from the partners, and in November 1999 it sold nine properties to the newly formed Tesco BL Holdings, retaining three properties, one of which was sold in 2001. The remaining two properties are now undergoing a significant programme of refurbishment. At Weston Favell, Northampton, an extension adding 6,000 sq m (65,000 sq ft) has recently been completed and is almost all let or under offer. Following completion of the successful extension at Beaumont Leys, Leicester, a redevelopment of one of the malls is now under construction and will become a new purpose-built Wilkinson store. During the year the Partnership also funded a small extension of 240 sq m (2,600 sq ft) to the Tesco store. In March 2004, the Partnership raised a new bank loan of £87.2 million, enabling the partners to extract these funds in repayment of their capital (see note 26 ).
Tesco BL HoldingsJV Partner: Tesco PLCDate established: November 1999 Portfolio value: £415m, comprising two retail parks and two shopping centres each anchored by Tesco, and five Tesco supermarkets Annualised net rent: £25m Finance: £210m loan provided by a syndicate of banks, led by WestLB, without recourse to the joint venture partners Value of British Land net investment: £103m This joint venture was established to acquire nine properties from The Tesco British Land Property Partnership in November 1999. The properties are actively managed and the joint venture is currently funding a 230 sq m (2,500 sq ft) extension to the Tesco store in Bury. During the year rent reviews have been successfully settled by agreement on the stores at Bury and Maidstone. Additionally, the rent review of the Tesco store at Milton Keynes was determined by an independent expert and achieved a 62% increase over the previous rent.
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BL DavidsonJV Partner: Manny Davidson, his family and family trustsDate established: September 2001 Portfolio value: £496m, comprising circa 80 properties, principally retail warehouses and Central London offices Annualised net rent: £29m Finance: £114m investment, development and working capital loan facilities provided by Royal Bank of Scotland, without recourse to the joint venture partners. The joint venture also has debentures of £124m, and other bank loans totalling £23m Value of British Land net investment: £103m This joint venture was established to acquire Asda Property Holdings plc, which owned a portfolio of properties, principally retail warehousing and Central London offices. During the year, the office and retail development programme has been completed (funded from the RBS facility) and sales with proceeds totalling £5 million have completed at above valuation. The joint venture has recently commenced a mixed use development in Leeds.
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BLWest companiesJV Partners: WestLB, WestImmo and Provinzial (together 50%)Date established: September 2000 Portfolio value: £314m, comprising four City office buildings Annualised net rent: £24m Finance: £235m bank loan provided by a syndicate, led by WestLB, without recourse to the joint venture partners Value of British Land net investment: £38m In September 2000, British Land sold a 50% interest in four prime city offices to a joint venture with WestLB, WestImmo and Provinzial. British Land retains a 50% interest in the venture. The properties, all located in London EC4, comprised three office buildings developed in 1992: 1 Fleet Place, 10 Fleet Place, 100 New Bridge Street, and Watling House, Cannon Street EC4, an office building constructed in 1998. During the year, further rent reviews on 3,800 sq m (41,000 sq ft) resulted in a net increase in rent of £0.2 million per annum. Lettings, lease regearings and extensions were completed on a further 18,200 sq m (196,000 sq ft) which improved the property valuation. In April 2004, the properties at 100 New Bridge Street and Watling House were sold for total consideration of £151 million, and the related bank debt was repaid.
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BL FraserJV Partner: House of Fraser PLCDate established: July 1999 Portfolio value: £256m, comprising 13 department stores Annualised net rent: £13m Finance: £140m loan provided by a syndicate of banks, led by Eurohypo, without recourse to the joint venture partners Value of British Land net investment: £56m This joint venture was established to acquire and leaseback 15 House of Fraser freehold and long leasehold department stores, mostly in major provincial towns and cities. The joint venture purchased a further store in Bristol from Bentalls, funded a significant redevelopment of the Guildford store resulting in higher rental income for the joint venture, and profitably sold the stores in Doncaster and Perth. All properties are let on 40 year full repairing and insuring leases to House of Fraser with minimum guaranteed uplifts for the first two rent reviews, based on the higher of 3% per annum uplift (since 1999) or open market value. The first of these reviews occurs in July 2004. During the year, the store in Darlington was sold significantly above valuation and funds were returned to the shareholders.
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The Public House CompanyJV Partner: Scottish & Newcastle plcDate established: April 1995 Portfolio value: £23m, comprising 19 public houses Annualised net rent: £1.5m Finance: Repaid in full Value of British Land net investment: £22m During the year, a further 30 public houses were sold at auction, realising £41million, well above valuation. G. E. H. Properties LimitedJV Partners: Conran Holdings Limited and Wyndham InternationalDate established: November 1999 Portfolio value: £20m, comprising the Great Eastern Hotel Annualised net rent: £1m Finance: No external finance Value of British Land net investment: £10m The joint venture retains a 125 year head lease in the recently refurbished 267 bedroom hotel and restaurants complex at Broadgate. Blythe Valley Innovation Centre LimitedJV Partners: Solihull Metropolitan Borough CouncilDate established: June 1999 Portfolio value: £5m Annualised net rent: £0.3m Finance: £1m loan provided by Lloyds Bank, without recourse to the joint venture partners Value of British Land net investment: £1m The joint venture owns the Innovation Centre, run by Warwick University, at Blythe Valley business park. The centre offers facilities for start-up businesses. BL GazeleyJV Partner: Gazeley PropertiesDate established: January 2001 Portfolio: £19m, comprising two development properties Annualised net rent: £nil Finance: No external finance Value of British Land net investment: £7m This joint venture, funded by the shareholders, has acquired development sites at Thatcham, Redditch and Enfield, providing principally distribution warehouse accommodation. Following the successful development and sale of the first phase at Thatcham (a 33,070 sq m/356,000 sq ft distribution unit pre-let to Scottish & Newcastle), the joint venture has now commenced the development of the remaining site to provide a distribution warehouse of 23,690 sq m (255,000 sq ft), due for completion in September 2004. At Enfield, the joint venture has completed and let over 36,880 sq m (397,000 sq ft) of distribution units and subsequently sold the investment. At Redditch, the company has agreed terms for the sale of two small plots. BL Rosemound Limited PartnershipJV Partner: Rosemound DevelopmentsDate established: March 2004 Portfolio: £29m, comprising development land Annualised net rent: £nil Finance: £20m loan facility provided by Bank of Scotland, without recourse to the joint venture partners Value of British Land net investment: £7m This joint venture was set up to acquire and develop 30 hectares (74 acres) of land at Daventry International Rail Freight Terminal, at junction 18 of the M1 motorway. The land has outline planning consent for 130,000 sq m (1.4 million sq ft) of distribution warehouse accommodation over four sites. Detailed planning consent has subsequently been obtained for a 67,350 sq m (725,000 sq ft) distribution unit on the central site. Back to top
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