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Operating & Financial Review

Adding value to our assets

We add value by a range of asset management and development initiatives, building on our quality assets and customer focus. The product of these endeavours typically is increased rents and new lettings.

New lettings – value creation Number Sq ft
000		 Rent*
£m		 Increase in
rent† £m
Retail warehouses 25 330 6.1 3.4
Shopping centres 138 226 9.9 4.5
High street retail 26 71 3.4 2.3
City offices 17 755 34.4 32.9
West End offices 19 113 4.0 3.4
Other 129 1,532 10.1 7.8
Total 354 3,027 67.9 54.3
including 100% of joint ventures
* total annual rent including rent free periods
† above previous passing rent

In the year under review, including joint ventures:

  • 354 new lettings and lease renewals, covering 278,700 sq m (3 million sq ft) of property brought new rent of £67.9 million per annum, after expiry of rent free periods. These include letting all the available offices and most of the retail at Plantation Place, EC3 and concluding agreement with Willis to develop their new City headquarters;
  • 226 rent reviews were settled which have increased rent by over £12.7 million per annum, 7% above our external valuers’ estimates at the valuation date preceding the rent review, and representing 4.6% per annum year on year growth over the five year review pattern;
  • redevelopment of the ILAC Shopping Centre, Dublin, owned jointly with Irish Life Assurance, has commenced. This major upgrade will involve relocating certain tenants, remodelling units and extensive works to create new facilities and amenities for tenants and shoppers in what has become Dublin’s premier retail destination. A return of 80% is projected on the cost of €60 million;
  • three extensions were completed at stores occupied by Tesco providing 1,630 sq m (17,500 sq ft) at a cost of £4.1 million. Initial additional rent is £300,000 per annum;
  • the surrender and re-letting to Next of a unit in Beaumont Leys shopping centre, Leicester has been agreed. In addition to improving the tenant mix, the new rent of £22 per sq ft will significantly increase the rental values for the adjacent units, from the previous low level of £12-14 per sq ft. This is estimated to generate an increase in value after costs of some £2 million;
  • we were in active dialogue with Allders and Courts and, following their recent failures, we took the opportunity to negotiate the take back, remodelling, reletting and/or assignment of the eight stores in our portfolio, thereby improving tenant mix and increasing rents overall by an estimated £1.6 million per annum;

all examples of the many asset management projects each year which add value but are not widely reported.


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