Business Review
Key Performance Indicators
The leading indicators measuring our performance against the key elements of our objectives and strategy are:
| Year to March 2009 | British Land |
IPD Benchmark |
|---|---|---|
| Occupancy rate | 94.9%1 | 90.6% |
| Average lease term, remaining to expiry | 14.8 years | 9.9 years |
| Rent subject to break/expiry over next three years | 6% | 18% |
| Like-for-like rental income growth | 2.7% | 2.1% |
| Like-for-like rental value growth (ERV) | -5.9% | -4.6% |
| Portfolio capital return, per IPD | -30.2% | -29.7% |
| Rent review settlements versus ERV | 3.1% above | |
| Customer satisfaction survey - 82% of tenants rated British Land 'good' or 'excellent' as a landlord | ||
1 96.4% underlying, including accommodation subject to asset management initiatives and under offer
The table above shows a fall in value for our portfolio comparable with IPD in a year where all property has been repriced in a thin market. Income security will be a key determinant of value going forward and we would expect our prime properties with long leases to see better relative performance prospectively. The high levels of occupancy and rental income growth are strong indicators of our continued selection of properties that are in demand, and that this converts over time into growing rents.
We successfully achieved an improved position for customer satisfaction, an important feedback from our many tenants.
| Financial Performance Indicator | One year | Three Years | Five Years |
|---|---|---|---|
| Total shareholder return 1 | |||
| - British Land | (48.6)% | (26.6)% | (4.8)% |
| - Peer group 2 | (65.4)% | (33.2)% | (12.2)% |
| - FTSE Real Estate Index | (62.2)% | (32.4)% | (10.4)% |
| - Ranking in peer group | 1 | 1 | 1 |
| Total Return 3 | |||
| - British Land | (61.6)% | (22.8)% | (4.6)% |
| - Peer group | (40.8)% | (7.9)% | 3.5% |
| - Ranking | 4 | 5 | 4 |
| Earnings per share growth 4 | |||
| - British Land | (6.6)% | 11.7% | 7.5% |
| - Peer group | (8.8)% | 4.1% | 4.7% |
| - Ranking | 3 | 1 | 2 |
All data in the table has been restated for share issues
1Total shareholder return represents growth in share price plus dividends per share (assuming reinvested)
2Average of major peers - Land Securities, Hammerson, Liberty and SEGRO (some differences in year ends)
3Total return (pre-exceptional) represents growth in adjusted, diluted net asset value per share plus dividends per share
4Adjusted diluted earnings per share (excluding exceptional items, profits on asset disposals and revaluation gains)
Source: Datastream, company reports
On the valuation measure of total shareholder return we were ranked first among our peers across each period. For total return, the higher level of gearing compared with our peers has worked to the detriment of performance over recent years and this in turn is reflected in a lower relative ranking on such returns over a five year horizon.
On the income measure of earnings per share growth, we retain strong leadership over a three time horizon and we were ranked third over a one year view.