Business Review
Key performance indicators
High levels of occupancy, rental value growth and rental income growth are strong indicators that our prime properties are in demand.
The leading indicators measuring our performance against the key elements of our objectives and strategy are:
Year to March 2008 |
British Land |
IPD Benchmark |
|---|---|---|
| Occupancy rate | 97.9%1 | 92.7% |
| Like-for-like rental value (ERV) growth | 6.2% | 4.0% |
| Like-for-like rental income growth | 5.7% | 2.5% |
| Portfolio capital return, per IPD | (11.5)% | (13.2)% |
| Rent review settlements versus ERV | 7% above | |
| Customer satisfaction survey | ||
 - REAL SERVICE Best Practice Index |
Top quartile |
199.2% including accommodation subject to asset management initiatives and under offer
Financial Performance Indicator |
One year | Three Years | Five Years |
|---|---|---|---|
| Total shareholder return1 | |||
| - British Land | (38.2)% | 6.5% | 20.0% |
| - Peer group2 | (27.8)% | 7.5% | 18.2% |
| - FTSE Real Estate Index | (33.3)% | 6.8% | 19.8% |
| - Ranking in peer group | 5 | 3 | 2 |
| Total Return3 | |||
| - British Land | (18.1)% | 10.7% | 12.8% |
| - Peer group | (1.0)% | 14.7% | 13.3% |
| - Ranking | 5 | 5 | 3 |
| Earnings per share growth4 | |||
| - British Land | 23.3% | 25.2% | 14.4% |
| - Peer group | 18.4% | 9.4% | 6.6% |
| - Ranking | 2 | 1 | 1 |
1 Total shareholder return represents growth in share price plus dividends per share
(assuming reinvested)
2 Average of major peers – Land Securities, Hammerson, Liberty and SEGRO
(some differences in year ends)
3 Total return (pre-exceptional) represents growth in adjusted, diluted net asset value
per share plus dividends per share
4 Adjusted diluted earnings per share (excluding exceptional items, profits on asset
disposals and revaluation gains)
Source: Datastream, company reports
The high levels of occupancy, rental value growth and rental income growth are strong indicators of our continued selection of prime properties that are in demand, and that this converts over time into growing profits.
Our outperformance at a capital level versus IPD is encouraging, reflecting again the prime nature of the portfolio. However, clearly prime property is not immune from market forces and so the capital return is negative.
Compared with our valuers’ assessment of market rents at the nearest date to rent reviews, the rent increases achieved on average were 7% higher, reflecting good out-turns for those negotiations.
We successfully achieved a top quartile position for customer satisfaction, an important feedback from our many tenants.
On valuation measures – total shareholder return and total return – the higher level of gearing compared with our peers has worked to the detriment of performance in the current year and this in turn is reflected in a lower relative ranking on returns to second and third place over a five-year horizon.
On income measures, we retain strong leadership over a three and five-year time horizon and despite a 23.3% increase in earnings per share, we were ranked second over a one year view.
