British Land Company PLC (LON:BLND)

Investor Day 2019

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Sep 18, 2019

Good afternoon, everybody. Welcome to Paddington and specifically, of course, to the Story Club. Many of you won't know who you're looking at. So I just wanted to briefly introduce myself, Tim Score, the Chairman of British Land. And as this is the first sort of capital markets event that we've done since I assumed responsibility for the role a couple of months ago, I just wanted to take the opportunity to welcome you personally and introduce myself. And some of you will be aware that I've been on the British Land Board for five years now, just over, and have been chairing the audit committee throughout that period. Not surprisingly, therefore, I have a finance background. And my last executive job was a CFO of ARM Holdings, the tech company, where our CFO for thirteen years and retired just about a year before ARM was acquired by SoftBank in 2016. So today is not about sort of new strategic announcements for British Land. It's more of an opportunity for the wider British Land team to demonstrate how we are delivering kind of every day against our clear and consistent strategy to build what most of you will be aware is an increasingly mixed use business. In many ways, it's a fascinating time to take over as Chairman. British Land is not, of course, immune to the impacts of the political uncertainty that we're all experiencing nor is it immune to the structural changes that are impacting the industries in which we operate. But I believe, and the Board believes, that given the work that's been done in this company over a number of years, we are well positioned not only to sort of navigate through these choppy waters but also to be one of the companies that thrives in the medium to longer term. And today, you'll have the opportunity to, as I say, meet the wider team, the wider BL leadership team, who are, let's face it, responsible for executing our mixed use strategy. And the space we're in today, in Story Club, I would say, is a great example of that strategy and arguably represents British land kind of at its best. It's modern, it's high quality and it's available for all of the occupiers on the Paddington campus. And it was sort of conceived and delivered specifically to respond to what we know our customers and their people want from their workplace. So that's a brief introduction. I'll be around all day. I've already had the opportunity to meet some of the investors. I'll be meeting more over the next few weeks and months. And hopefully, we'll be able to meet some of you personally today. But with that, I'd like to hand over to Chris and the team. And hopefully, you will have an interesting and enjoyable afternoon. Thank you very much. Good afternoon, everybody, and let me add Tim's or let me add my welcome to Tim's. Thank you all for coming. One of our now retired colleagues who has ran city leasing for us, used to talk about good leasing weather. And today, trust me, it's good leasing weather. If we can't make this campus look good today, then we probably should be in a different business. As I said, welcome as Tim said, welcome to Story Club, too. It's brand new. We only commissioned it and had it operating in April. And as Tim said, it's a utility for the people for the customers who we have on the campus and actually beyond. And already, some 75% of the people or rather the companies represented on the campus have already rented new space here. And that means we're on budget from a revenue perspective. And bear in mind, this was simply a storeroom before we converted it. I mean it was never space that we envisaged being able to rentalize upstairs. It was actually not used space at all. So a real opportunity for us to do something quite different. The other thing about this and what you'll hear more about us is that not only does Paddington or rather not only does Story Club do what I've just said, but it's part of a broader offering. And you'll hear from Mike Wiseman in a bit about the broader offering we're able to give people. And this is part of it, to give you a very simple example of that. Imagine a company that's thinking about how much space they need. You look at them, you help and they realize that they don't actually use the boardroom very often, but they still need the boardroom. They don't need a boardroom if they can come and block base block book space here over the next couple of years. That can make the rest of their space usage much more equivalent. Simple example, but important. If I move on from there, I guess this slide is designed to do two things. First of all, it's to give you a sense about what today is about. And as Tim said, we're not going to talk about new strategic initiatives here. We've set out our strategy. We regard it as a good strategy and one that we're on the way to delivering. Today, something rather different, I would encourage you to think about it as an invitation by us to understand our business somewhat better, understand and get to know some of our people better than you know them today. You will hear from more than 20 people today in a bunch of formats. You've already seen some of the demonstrations, but we're going to do it in a bunch of those. I'll show you the agenda in a second. The other sense of this slide, of course, is our purpose. And we've talked for a number of years about places people prefer. I sometimes think that, once somebody said, it's actually very difficult to figure out who first said it, that a picture is worth 1,000 words. And so we thought we would take this example of what Paddington looked like six years ago. You'll see a full and frank exchange of views between two cab drivers. I'm not sure you've all been part of that historically. But we took what places people prefer enabled us was to turn these sorts of places, this place, in fact, from this into something very different. How did we do that? A bunch of stuff that you can read in a textbook in terms of meantime use. You've seen pergola outside in terms of which has been seen something like 400,000 people use it over the last few years. We took what the canal, which was a barrier, a very unattractive barrier, frankly, and turned it into attraction. We're now the proud owner of four canal boats, which have enabled us to radically increase the amount of F and B offering on top of what we've already added, and there's more to come. I'll come back to that in a second. So that really combination of things, but it's also a know how thing in order to bring those things together to create what you've seen today, landscaping and all the rest. The other thing I'd emphasize is that from then till now, it's just not soft. It's not as a number of you were kind enough to say, great feeling, very different. It's also generated very good returns, something like 11 per annum IRR on this, to say, on an ungeared basis for those of you who count these things. But to come back to purpose, purpose, as I see, has been very helpful to us in connecting with our people, connecting with our customers about what we're delivering. But I would argue that it although it doesn't get much airtime, and that's why we wanted to talk about it here a little bit, in company results and so forth. It's actually even more important than it was because of what is being asked of companies, and rightly so, by the way, in a broader sense in terms of how we deal, how we operate, how we touch the environment, how we interact with local communities. And indeed, more broadly, what society requires requests out of corporations if they're kind of going to keep their license to operate. And again, when we use that wording, which is, as I say, kind of infused into the build into the business, that is quite a useful thing to talk about in a broader context. Anyway, so that is where it is. And maybe just to leave you with that thought, I said about canal boats. We're actually also, it turns out, in the business of creating new canal boats. The things you see out there are actually refurbishments. We do refurbishments. Now we do refurbishments of boats. We also construct new boats. That will be a new cheese and wine restaurant, believe it or not. At least I hope it's true because that's what they told me. Now in terms of the agenda, you've got it in your packs. I won't spend a lot of time going through it. What I would say is we've tried to do things in a different and interesting way. You've got presentations, you've got breakouts, you've got panels. As I said, you've already seen demonstrations. What we're what we've been, if you like, is driven by you. In other words, you talked to us about the fact you wanted plenty of time for Q and A. You talked about to us about the fact that you also wanted plenty of information on what is going on in retail. So we're trying to make sure that you're seeing and hearing about stuff that's actually going on, on the ground, but also looking at longer term factors, those things that we think will endure in terms of importance, some of them relatively new in the future. So there it is. Moving on. As you can see from here, and as I said, today is not really about strategy. What it is but I did want to put this slide up just to remind you where the business was, where it is today, where it's going in the future. What we're really going to be talking about is implementation, about the operating environment, and I'd say about trends, And this is the context for you to see it above. What that does mean, of course, over the course of the afternoon is we are going to be giving you quite a lot of information in different forms, but nevertheless a lot of information. And so what I wanted to really do is just give you a sense of within that context of a lot of information, what are four or five of the trends of the things that we really think are important that you should maybe keep in the back of your mind during the course of the kind of drinking from the fire hose kind of information experience you have today. So in terms of strategy, really two points to make. Mixed use gives us a competitive advantage. Why is that? Because of the combination of assets, of our customer focus, our expertise and our experience. And I think at this point, we have built up a decent track record. Paddington is a great example of that, of how this can really make a difference. And you'll hear how not only with our existing assets, but with some of our future assets, we can bring that expertise to bear. The second point I would highlight for you is perhaps over a later than many people thought, this industry is changing. And there are a bunch of trends. We're going to pick out a couple in particular today. One is around what I would describe as being technology. I know that's a huge topic, but we're going to try and really concentrate in on a couple of things which we think are really important, give us a competitive edge. If we mess up on, it won't be so good either. So that's the first thing. The second thing is in terms of sustainability, always been important, been important to British land for a long time. However, there is no question that, that is going up in terms of importance all around. And so we're going to try and kind of give you some thinking as to where we think of our efforts in that space moving forward over time. The third thing I really want to touch upon or have you think about is the importance of people. That may sound obvious, it may sound weird, but this company, it is not, in people terms, particularly large, about 600 in total. But the expertise that those people bring is absolutely critical to success. And I guess, the theme that I would seek to pull out for you is that what we have is a great deal of property real estate experience, and that is an absolute bedrock of what this company does. But the other aspect, which I think is really important and actually which I'm also very proud of, is that over time, we've added to those critical skills another set of skills, which to us feel equally important and arguably much new and therefore harder, you might argue, to acquire, and those are around things like technology. So making sure we've got people who understand code, making sure that we have people who understand the data, how to collect it, how to process it and how to make it relevant to our customers. Those are new skills, I would argue. And again, we think really important, to put it another way, we actually have today people we wouldn't have had five years ago who come in and look at a place like this that was a storeroom and say, this is how I can make a great space. That gives us a competitive example quite clearly. Fourth my fourth point is around development. Development is important for at least two reasons for us. One, financially, there's it's been very successful. As you know, for us, there's a lot of profit to come. But equally important in terms of the overall performance over time, it is obviously critical in our capacity to continue to make our campuses better and better. And as you'll hear about Canada Water, to start kind of ground up on something very new. So that is something that has delivered financially, will continue to deliver financially. Finally, my fifth theme for the day is capital efficiency, something we've taken very seriously for a number of years. You'll hear quite a lot from Simon and some of my colleagues too about it. But just dwell on a few facts. The one maybe that is top of mind right now is around the extent to which we brought gearing down over the course relatively recently, in the course of much less than the full decade that I've been here. But that obviously, if you look around the place right now, is a competitive advantage for us, particularly in the retail context, but also buybacks, also sales and our willingness to think thoughtfully can you think anything but thoughtfully? Think about how we use our capital to deliver capital efficiency. So that's kind of what we are looking to do today. I guess as I introduce Darren, it's worth just making a comment around organizational structure. Again, you won't hear much about this sort of stuff when we give you the results. But I've always been a believer that you need organizational structure to make your people effective. And we found ourselves in a position where our business, where we were organized in terms of having one silo, if you will, doing offices and one silo doing retail wasn't optimal and didn't really reflect the way we were taking the business. So we took the decision earlier this year to put those businesses effectively that part of the business into one, so leasing sitting under one person together with asset management right across the business. Darren Richards, who's going to speak in a second, was the obvious person to do that. Been in the company since 02/2005, experience across a relatively broad segment of the company and also one of those people I talked about with really deep property experience. As I say, Darren's been with us since 02/2005, been on the executive committee for the last five years. So with that, wherever he is, because I can't see him right now, there he is. Darren, over to you, my friend. Good afternoon, everyone. I wanted to focus on two things today. Firstly, the importance of mixed use, which as you've heard from Chris, is already a significant part of our business and one we intend to grow to become a core focus. So I want to explain why we think we've got the assets and the expertise in order to deliver this. And secondly, I want to take you through how we're navigating the retail and office occupational markets, particularly retail, which I know you're interested in. I'll take you through how we've been responding to it and that what we're starting to see on the ground as a result presents a somewhat steadier picture than some people might have thought. So let me kick off by looking at our portfolio today. You've seen something similar from Chris. 51% in London campuses and London offices, 45 in retail, 68% overall in London and the Southeast. And this already contains quite a lot of mixed use. I'll come on to that in a moment. But first of all, what exactly do we mean by mixed use? As a general kind of industry expression, it means a combination of three elements normally: offices, retail and residential. For British Land, at the moment, it's predominantly office assets where we've been injecting retail and leisure uses. Now going forwards, we'll probably play around with those proportions a bit more depending upon the assets, but that's where we are right now. But for us, it's more than about just proportion and mix. Our customers become more demanding. The war for talent means that they're after increasingly quality space to attract and retain the best people. They don't just want a great building, as you can see here, and I'll pick a few. They want transport connectivity. They want amenities. They want leisure. They want retail. They want to feel like they're plugged into a wider community. Now they also want, from their space, flexibility. They want it to be tech enabled. And increasingly, they want it to be sustainable. Now if you deliver this, you create demand for your products, and that's what we think is playing out right now. I'll come on to that in a moment. And that's how we're going to be driving value through this portfolio. Now we think we've got two inbuilt advantages here. And very simply put, our assets, and as Chris referred to, our people. Now when I talk about our assets, I don't just mean the standing stock we have at the moment, as important as that is. It's the potential that we have embedded in this portfolio that's really exciting. In addition to the 1,200,000 square feet of committed campus development that we have at the moment, which you all know about, We've got nearly the same again in terms of campus development in our near to medium term pipeline, including 5 Kingdom Street just outside, which is currently in planning. But it's not just about the existing campuses. It's about our potential to create new mixed use places. We've got an outstanding office led mixed use place in Norton Fulgate, which is ready to go next year. At Ealing, we think we can add up to, over time, 400,000 square feet of offices in and around the retail opposite the Crossrail Station. We've got options at Kingston and Woolwich over a longer period of time. And of course, there's Canada Water, a new fully mixed use urban center for London. Now one thing I should point out is it's not just about having the assets, it's about having scale and control of those assets as well. And when I talk about control, it's controlling what we call the groundscape. And that's the lower levels, that's the ground level, and it's also the space in between the buildings. And you need that in order to be able to deliver things like Eataly here at 135 Bishopsgate. This is Exchange Park, also at Broadgate. And I'll bring you back to Paddington. This is the amphitheatre outside. It's really important. And therefore, need the assets and the scale. We think we've got both of those. And as I said, you also need the people to be able to deliver this. We can leverage an operational platform with a depth of experience across development, planning, marketing, data, technology and property management. We now have a single combined asset management team, so we can ensure that there's consistent delivery of our strategic goals. And we've got dedicated leasing teams, who you'll hear from later today, which we've been focusing on developing over the past few months because that's the first point of contact with the most important person, our customer. Now you need all of this in order to be able to develop and run complex assets. And we think we've got we think that not many people have this level of capability or the track record. And that's really starting to differentiate us. And it makes us a natural partner to work with, from sovereign wealth funds like Norge and GIC to specialists like Oxford Properties or local governments like Southwark down in Canada Water. So we think we're really well to set up to deliver our mixed use strategy. You're going hear a lot about this from the team later on. So I'll move on to kind of Part two, as I'd call it. I'll take you through our approach to the markets and what we're seeing on the ground, so to speak. I'll start with the office market. Now as you've heard from this morning's release, we've had excellent momentum on our leasing program. Now that's evidence of the continued appeal of London despite Brexit. It's evidence of this unconventional cycle you've heard us talk about before. But as Mike Wiseman, our Head of London office leasing, will come up and tell you in a minute, not everyone's experienced the success to the same level. And we think this is evidence that our campus proposition is now resonating with our customers, as I alluded to earlier on. We're taking disproportionate market share. We're getting higher rents and we're improving our leasing velocity. So we're now 85%, as we said this morning, on our pre leasing for our development pipeline. And I don't just mean we're doing well on the big shiny developments as great as they are. It's also our ability to repurpose spaces becoming particularly important. Places like One FA, where we've taken nearly a 30 year old building and made it fit for purpose for a next generation tech occupier like Mimecast. There's a couple of other themes I want to pick out. The evolution of flex. Now STORY has been tremendously successful for us. We're on track to have a our pipeline should be accomplished within by twenty twenty, 300,000 square feet and 10 buildings, as shown here. And also Storey Club, which you're sitting in, has been really additive to our offer. But we think about flex in a wider context. And what I mean by that is our ability to respond to all of our customers' requirements, not just at the start of their journey, but throughout it. So for example, adding core space and services as their businesses evolve. Mike's going to cover that in bit more detail in a moment. And the second theme is the increasing diversity of our customer base. We signed deals recently, I've mentioned, with Mimecast, Peel Hunt, McCann and of course, Dents Who Ages at Regent's Place. As we increase our weighting to tech, professional services and creative, they now represent nearly 50% of our customer base. That's nearly double what it was ten years ago. Again, this is the campus mixed use proposition appealing to a wider diversity of customers. Now you're going to hear more about all of this from Mike later and our strong progress in office leasing, but I'm going to turn to what you were asking to talk about, retail now. I'm going to flip back to our portfolio slide for this. So the retail market. Yes, I can confirm it's tough out there. I've been working in and around retail for the past twenty years, and it is definitely the toughest I've seen it. We all know the reasons why. It's been done to death, so I'm not going to dwell on it today. And with the help of the CVA, the use of CVAs, as you'll hear later from Bronner, the abuse of CVAs, it's driven a lot of uncertainty and negative sentiment towards the sector. But stepping back for a moment, if you look through this, we can see how this is likely to play out eventually. Online will take a greater market share. We'll have less physical space. We'll have reduction of physical space. But what we'll have is polarization within that and probably a greater understanding of the role and value of the store in a retailer's omnichannel or omnichannel proposition. But we're not there yet. And to be honest with you, in terms of the whole U. K. Market, including secondary and tertiary, we're probably into a ten year workout period. Now for the best assets, the best owners with real expertise, you can get there a lot quicker, and that's what I think is really starting to mark us out. Our expert people with great relationships with our customers built on in-depth knowledge of their businesses, backed up, as you'll see outside, with a lot of data and insight. Now we combine this with a very purposeful and pragmatic approach to keep our portfolio full and outperforming operationally. Now the big question everyone asks is where are rents going? Of course, ERVs have been coming off. The truth is the spread is going to be enormous depending on location, depending on asset, depending on a lot of different characteristics. And that means you've really got to know what you're doing. You've got to know when you can push back and be robust, but you've also got to know when you've got to face into the market. And sometimes that means, yes, rebasing rents to a level that you can then transact off. And that's what we've been doing, and that's what we're going to continue to do. That's why our leasing volumes are high. That's why our occupancy is high. And that's why our sales and footfall are high relative to the market. Now Ben Gross, our Head of Retail Leasing, will be taking through this in a lot of more detail later. And Broner, as I said, will be our in house CVA expert, will be taking you through that a bit later as well. But in the meantime, I just want to kind of wrap this up by breaking this down a little bit more in context of our current portfolio. As you can see, we've got 11% in London and the Southeast. This is multilet retail, by the way. And that includes places I've talked about just now, like Ealing and Kingston, which are true mixed use developments or have the potential to do that. It also includes schemes like Whiteley, where we've previously had an Investor Day, which has been a very solid performance for performer for us. ERVs have remained pretty solid there. In fact, they've actually increased over the past two years. That leaves us with the Solis portfolio. That's another 7%. Obviously, there's been investor demand here. Sally will cover this later. This is the pot we've been selling out of. And that leaves us with 28% of the business outside of London and the Southeast. That's our regional portfolio, which includes things like Meadowhall, as you'd expect. Meadowhall will not be immune from this. Meadowhall's hard work, as all big schemes are, by the way, but we've done 72 deals in the last two years. That is an incredible amount of volume. And as you can see from here, we've had thirteen consecutive months of positive footfall growth, And our Q1 like for likes are up, positive sales growth. I'll give you another example. Fort Conaird, Edinburgh, 14 deals in two years, as it says there. We're getting rents out of town of £70 a square foot at the moment, last deal three months ago. These aren't historic numbers I'm giving you. And we're getting them on smaller units, pounds 70 per square foot and in excess of that, I should add, is about double what you'll get for a 10,000 square foot unit. This means we can actually economically slice these units up, protect our income line, but give retailers smaller, more affordable space. Again, sales and footfall are up here as well. Now let's look at this final chunk of 9% of our portfolio. This is where performance has been a bit more mixed, to be honest with you. And as Sally will cover later, this is probably where we're going to sell out from over time. I'm just going to pick a couple of assets out of this part, partly so you can see what I'm talking about and partly to explain our approach. Now these are both assets where we've home bases back. We've got two home bases back out of our portfolio at twelve. And I'm going to give you two different scenarios just to explain our approach here. First of all, I'll take you as far north, thankfully, BL go to Inverness. We've got a 50,000 square foot home base back. We decided not to slice this one up. It would have harmed demandsupply tension and wasn't a great use of our capital. But if you're leasing this kind of space, 50,000 square feet at once, we knew we'd have to lower the rent to get it away. Within a month, we're under offered to the range, and we did a deal which is in line with our March valuation. Now rents on standard sized units here have come off as well. We've got two more units to let, and then we'll be 99% full here. Now since the range opened, our Q1 sales here, like for like, have gone up 17%. Now I'll give you a different example. Orbital Swindon. We've got a home base back, 40,000 square feet this time. Different demandsupply dynamics, different tactics. In this case, we were able to slice it up. Little have taken the pre let here. We've got two smaller units to go, which were under offer, again, at March values. And when that's done, they'll this scheme will be 100% let. So hopefully, can see this clear, purposeful, pragmatic approach coming through. It leaves us with schemes that are full, they're affordable and they're performing for our customers, and that's very important, obviously. And we're also doing deals which are starting to be reflected in our valuations. Now of course, Retail is also a key component of the mixed use strategy, enlivening these places I was talking about earlier on. Ben and Sarah and the team are going to be talking to you later about how successful our leasing has been at Broadgate. It really has been very successful. So let me just finish by saying we think we've got the assets, the people and the approach to differentiate us as a landlord. There's a lot of hard work involved, that's going to continue. But we think in this market, it won't just polarize around locations, it's going to polarize around the best owners and operators of real estate also. So that's enough from me. I'm going to hand you over to Mike now. Mike's done a fantastic job of building a modern fit for purpose leasing team over the past few years. But what makes Mike truly special is he started out life in the BL development team, which means he's got a really strong technical knowledge of our products, and that is invaluable when he's dealing with our customers. Thank you. Good afternoon, everyone. As Darren and Chris have mentioned, we've had a great run over the last few years and we're now in a position where our portfolio is practically full. And that's obviously a great place to be. Critical to this success has been the success in our leasing portfolio and leasing up our developments. The committed schemes are now 85% let with a further 9% committed to story. Primarily located at Broadgate, this campaign has been a real success. The slide behind me shows a summary of some of the key deals and statistics around those, which I'll come on to in a moment. We've seen high velocity with all four buildings predominantly let at practical completion. And we've attracted new types of occupiers like McCann and Mimecast to Broadgate. And what's more, we're achieving terms ahead of the market. Our average lease length across the 1,300,000 square foot of deals is fourteen point seven years with thirty one point eight months rent free. And in recent transactions, we've brought rent freeze below the resistance level of thirty six months on a fifteen year term. We've also moved rents on significantly. At Broadgate, average rents have increased by over 30% through the course of the campaigns. And over the last twelve months on a like for like basis, we've seen 13% increase in rents. And this compares to a marketing increase of less than 5%. So with latest lettings have been at over £80 a square foot compared to the city prime rent of £72.50. We've also had success in our retail leasing, successfully doubling the retail provision at Broadgate and bringing new types of occupiers to the campus. Now the team will explore these in more detail in the breakout later. It's clear to me that we've outperformed because of what's been described as our consistent focus on the customer. We've evolved our proposition to meet their changing needs. We've delivered the right product both in terms of building and our offer. And we were bold in positioning ourselves to capitalize on the supply demand imbalance that we're seeing. And to be clear, the market continues to feel good. Supply remains relatively constrained. Much of the development pipeline is already committed and we continue to see strong occupier demand. We're upbeat about the interest in what little remains of our development portfolio and even more so about the schemes that come next like 1 Broadgate and Norton Fulgate and about our vacancies, whether long term refurbishments or the shorter term lower cost products. And with such diversity in the ownership of and uncertainty around schemes across London, our track record of delivery is a real advantage when engaging with the early pre let market. So I'm now going to expand on some of those themes that Chris and Darren have picked up and explain how we've evolved our proposition to respond to this. Firstly, Chris talked about outperformance being driven by delivering the best quality buildings. And this is true. Not everyone developing new space has had a similar experience over the last few years. But this definition of quality has changed. No longer is it about refurbishment versus new build stock. Success now is about being best in class with whatever product you're delivering. Vanilla is no longer good enough. There is a real flight to quality. Now our commitment to great design and focus on product differentiation rather than taking a one size fits all approach has served us really well. Our developments at Broadgate illustrate this perfectly. The three buildings target different price points and different audiences. A Hundred Liverpool Street will redefine what a large city office building can be. Our interior architect, Universal Design Studios, used their hospitality experience to create internal shared spaces which were aesthetically striking yet functional. And this is a departure from the soulless receptions of old to something that becomes an extension of our customers' workspace and creates a high impact arrival experience for their customers. And it was this arrival experience which was critical for Millbank and Peel Hunt at 100 Liverpool Street. At 1FA and 135, we've targeted our spend inside the building. So working with the existing structure, we've created a raw aesthetic which radically repositions these 1980s buildings. And 1FA went furthest as you see behind me. We've created this dramatic new public space where retail and restaurants and workspace all collide underneath UBS' old trading floor at the base of the building. The result of these two refurbishments is that the likes of McCann and Mimecast have chosen Broadgate. These are occupiers who wouldn't have looked at Broadgate just a couple of years ago and certainly wouldn't have considered safer, more vanilla refurbishments. But these refurbishments also demonstrate that not only the British Land set the standard in ground up development, but also in creative reuse. And these skills will be critical as we move into an environment where sustainability pushes further up the agenda and reuse becomes the norm. But we've also shown that refurbished product performs. Recent deals in 01/1935 and 01/2005 have pushed rents beyond city prime rents. We've outperformed many new build competitors including tower floors. Product has become so important because of this recognition that the office is more than just a place to work. What we're seeing is a change in how people acquire real estate. There's a growing focus on people, on customers, on productivity and not just on cost. And this changes who's involved with HR playing a much more prominent role and it makes the decision making process that much more emotional. It also means that location has become less of a priority and product and amenity offer both inside the building and out have become much more of a focus. And we see this in terms of where occupiers are taking space with much more moving between submarkets. And McCann's move to Broadgate is probably the most high profile example of this in the market. Their move was all about bringing 11 agencies together under one roof and promoting better collaboration in their business. And the large efficient floor plates at 135 worked really well for this, but this was about much, much more than just the building. In moving people from the West End, McCann needed to be sure that there was a comparable amenity offer. And those improvements that had occurred in the neighborhood around us were really important, but it was the changes that we'd made on the ground in our ownership which made the difference. And it was our campus strategy which enabled this. The changes we've affected at Broadgate and here at Paddington and the subsequent leasing success we've had at both, they each demonstrate that this approach works. Thirdly, and perhaps the biggest theme right now is around flexibility. But this has become something of a catchall word. To be clear, to us, this means about much more than just the explosive growth of the serviced office sector. And we've positioned ourselves to respond to this trend, not just by building our story brand, but through our wider product offer. We're now delivering fully fitted, furnished and connected workspace to meet demand from businesses who sit between our story and conventional products. This is a real growth area and it complements our existing offer. It allows us to create spaces at different price points and add on additional service packages through story and this really highlights the advantage of our integrated approach. Our core and flex approach is also resonating with customers. We develop solutions for customers incorporating different types of space to help them use their real estate more efficiently and to reduce their day one space take. This means things such as taking space from taking space on flexible terms alongside a longer term commitment, guaranteed options to grow at an agreed price during the course of the lease, working in partnership to manage excess space and providing additional space on demand from Storey or here in Story Club. The expansion options that we designed for Mimecast and for Millbank differentiated us from the competition and were major factors in us doing those deals. But it's the meeting room conference and event spaces like this one at Story Club, which offer potentially the most exciting opportunity to help our customers revisit how they take space. For example, and the customer name is confidential at this point, we are working with an existing occupier on a Core and Flex Regear. This will see them reduce their long term space requirement, but rely on a BL run solution for their meeting room and breakout space needs. And this is space that they'll share with other customers. This will be facilitated by technology. We've installed sensors in their workspace to understand current usage and this will inform the requirement and set parameters for the deal. And this sort of approach gets a phenomenal response when we talk to customers about it. And I really do think that this sort of deal is a sign of things to come. Now the flexibility that we can offer is a true point of difference with the wider market. Being able to offer solutions rather than a binary choice between serviced and traditional changes the nature of the conversation that we have with our customers. We move from discussions about buildings and specification to one about our proposition. We're driving preference for British land and not just our assets. And it's a really exciting shift for the business. So all of this means that the relationship with our customers has never been more important. As long term owners who design, deliver and manage our buildings, we have a real advantage here. And from scale up to Global HQ, our customers really value this approach. With the increased operational experience developed through STORY, the full integration of our property management business, we are more focused than ever on delivering for our customers. And this positions us to grow our service offer, developing deeper relationships by helping them get more from their real estate. A great example of this is the growth in demand for our fit out delivery offer. Here, we build on our track record of delivery to integrate base build and fit out delivering program and cost benefits and making moving to British land assets easier. We're currently on-site delivering just this for McCann. But perhaps the greatest scope for growing our service offer will come through our integration of technology to enhance user experience and drive efficiencies in the management and use of space. You're going to hear much more about this from Sally and the team later. So as our offer broadens, we need a clearer, more consistent way of articulating this. And we do this through the five commitments to our customers, which are shown on this slide. The overriding concept here is one of partnership, of our offer being built around you, the customer. And this shift to talk about you rather than we is significant. This would not have happened in our industry just a few years ago. But with our comprehensive network of spaces, a full service management business, an operational platform in story, we are uniquely positioned to deliver on this. We not only deliver great spaces in great places, we offer more flexibility than the market. And we can do more to help our customers get the most from their real estate. And increasingly, we're acting as a catalyst to make meaningful connections between our customers and to help them come together and have positive contributions to the communities in which they operate. Now others could deliver on individual commitments. Our competitive advantage is bringing these together into one integrated platform. Thank you very much for your time. I'll be around for questions later. You've heard a lot from us about the theory and strategy that sits behind our mixed use approach. We thought it would be useful to hear from a panel of experts who are delivering that on the ground, so we've pulled one together. Tim Haddon. Tim was responsible for leading Paddington since we acquired it. Claire Barber, who until recently was the head of Meadowhall and our Central London Retail business and is now Head of Retail Development across British Land. James Lowry, James is the co lead of our Storey business. And Emma Cariaga. Emma has recently joined our Exco and is co head of our Canada Water Development. So Tim, as we're in Paddington, we'll start with you. We talk to investors a lot about, I guess, what we call our competitive advantage that comes with our campuses. What for you are the characteristics that make the campuses successful? I think from my side, it's all about scale. I think it's a really important part of it. And I think that does set us apart from our competition. So it means, clearly, we have a big focus on customers that Mike's mentioned, and we can actually rehouse people as they grow. And Dental Ages is probably the biggest example of that at Regent's Place. But it means we do create best in class office buildings, but we can also invest into the public realm and make a part of London that we've done here, for instance. We can also add to the amenity offer and the retail offer to make sure that we meet customers' needs and then also create a sense of community through kind of our events program, for instance, within that space. I think that's really important. I think you look at what we've done here at Paddington. Chris has mentioned it. We spent about £10,000,000 on the public realm ahead of the launch of this building. And that was a real differentiator in terms of when we came to lease the building. So we leased it extremely well. It was pretty much all let by the time of PC. And the level of rents we achieved were 35% above those previously achieved on the campus and in the area. A really compelling story. Clare, you worked at Broadgate until recently. You recognize a lot of that? I do. I think, for me, there's a real buzz and energy about our campuses. And I think a lot of the reason for this is the public realm. There's really nice intimate spaces where you can sit and have a meeting or there's big spaces where people can come together. And I think that, along with the food, the restaurants, the outdoor dining, it creates a natural energy. And I think that, for me, is attractive as a place to work, but I think it also draws in people from the local community and it just makes it really appealing and exciting. And how will the approach down at Canada Water be different to what we've done here in the Central London campuses? Well, look, campuses are not new for British land. We have an amazing track record at it. I think Canada Water will probably be our next generation of that. And what I mean by that is a couple of things. Firstly, in terms of scale, I think if you add Broadgate, Regent's Place and Paddington together, you get the kind of equivalent scale of what we have at Canada Water. So I think that's different. I think the other point that's undoubtedly the case for us at Canada Water is the inclusion of residential. I think our campuses to date have been largely office and retail led and increasingly mixed use encompasses residential, which we can do with about 3,000 homes being proposed at Canada Water. And I suppose the other thing would be to note the environment. I think we are south of the river and surrounded by green spaces and open water. And over onethree of the master plan we're proposing will be public open space and public realm. So I think in sort of contrast to a more urban commercial center in our existing campuses, Canada Water provides a really nice contrast. James, I guess one of the things we're most pleased about so far with Story but is maybe less tangible to these guys is how it's been additive to our campuses. Can you just build on that for us maybe a bit? Yes. I think in simple terms, Story adds an additional level of flexibility into the campuses. And this allows us to attract a different type of customer, typically a bit smaller, typically faster growing and often associated with the tech sector. This helps to diversify the people on the ground in a campus which I guess adds to energy that Claire refers to. It also helps us look after the address the flex needs of the larger our larger customers as well and doing it kind of in one location with one relationship. That might be their digital team that they want to have a different office environment. It might be a company they've acquired. For the larger deals, maybe kind of a new customer or as Mike mentioned, some of the regears, we can also help to enable some of the core flex side of things, which is kind of an exciting area to explore. Yes. I guess building on that another thing I know these guys are interested in is just the ways STORI is differentiated from some of the other flex operators in the market and I know you developed it specifically to be different. Can you talk us through few of those differences? Yes, absolutely. I think there are two main areas really. So firstly, at a product level, we designed STORI to focus on the larger side of the flex market. So we refer to scale ups not start ups essentially. And this group have specific needs. They want their space a little bit less shared, so more of a focus on their own space. They want a little bit or they don't need as much flexibility, so we offer one to three years rather than month by month. And probably most importantly, they want the space to feel like their own. So when you go into a Storey workspace, you will not see Storey anywhere. What you will see is the brands of our customers and that's really important. Secondly, it is kind of more on a structural level, owning the buildings, owning the areas around the buildings that we've heard about just now and owning the service layer which manages all of it is a real differentiator. It allows us to control more of the customer experience. And this can mean lots of little things actually, which collectively make a big difference. So for example, when you walk into a building heading to a storey space, it's the storey customer's name on the notice board. It's not that of a third party operator. That makes a difference. You go to the reception desk, a guest goes to reception desk and asks to go to the storey space. They get directed to their office, not to a secondary reception area. All of these and there's a number of examples of that, which it just makes the whole customer experience much more joined up and a bit more kind of grown up in the offer. Yes, Emma. Chris mentioned earlier kind of how we think about communities and how we think about the neighborhoods in which we operate in. As we know, it's something that's quite important to what we do. Is it something you think occupiers consider and think about? I think we know from our customers on our existing campuses how important it is in terms of the building that they're going to take, but as importantly and increasingly by their own staff, what is the environment they're buying into, what will their staff be able to do, how will they be entertained in their lunch times and indeed after hours. And at Canada Water, we are already starting to think about that. We've spent five years getting to know the place, the people and really starting to understand what are the attributes and stories that we want our future customers to hear. We've got places on-site like the Printworks, which is a meanwhile use switch well in advance of any development is up and running and has seen over 600,000 people over the last couple of years for all sorts of events and starting to kind of make those connections and that sort of sense of community that we're pointing to. And Clare was heavily involved in bringing Italy to Broadgate for those who don't know. And I know that for Italy, that broader neighborhood around Broadgate was really important to them. Yes, was. For those of you that don't know, Italy is the largest Italian marketplace in the world. And they had been looking for a site in London for about five years. And I think their expectation and certainly, the market expectation was that they were going to the West End. We spent a lot of time persuading them that Broadgate was the right location. And I think they particularly like the links into Old Street, Bittlefield, Shoreditch, but also being part of what we offer at Broadgate. And they saw their customers there, so there's a wide range of customers. There's the residents. You obviously got a lot of office workers and a lot of tourists as well. And Broadgate sits right on the transport hub. You've got 120 odd million people going through every year, and they saw that as very appealing. I think their one reservation was probably around Weekem Footfall, which they were concerned about. So we actually put up a camera and recorded footfall over a week and condensed it down into two minutes. And actually, in the location they're in, it didn't show a great deal of difference between weekday and weekend traffic. And I think that, along with everything that we were doing at Broadgate, really persuaded them that, that was the right location. And with occupiers, is it the same with occupiers? Does this broader mix of uses play a role in attracting them into the campus? How does that kind of play out in discussions? Yes. I think it's really important. I think what we know about our customers is that the whole talent attractiveness and retention is a really, really important part for them these days. And if you're the likes of, say, Google or Goldman Sachs, you can curate that environment yourselves. But for kind of everyone else, they see the fact that we offer this whole campus offer as a really compelling story to them. And Mike's mentioned McCann, that was a big part of the movement to Broadgate. So I think that does play to our advantage. I think take Paddington, for example. We spent a lot of time with our kind of existing and potential customers at the outset. And one of the big things that they wanted to see was an improved amenity offer. They wanted more places to go for lunch, more places to socialize in the evening, more places to go in terms of their kind of their overall leisure activities. And we responded to that, and we have the ability to do it. We've added, I think, 12 different retailers over the last few years and made a real difference. And I think perception wise, that has changed. There's some really, really positive feedback from people. And that's brilliant. But also, it's almost more important when your largest occupier, which is Visa, who are in 1 Sheldon Square, about 200,000 square feet, they commit. And they've just signed for a nine year extension within that building. Really, really good news for us in terms of performance, and a key part of that was the fact that those changes we've made. And James, guess that range of amenity even more important to the smaller businesses you deal with in Storey? Yes, absolutely. The average Storey customer is 45 people. So they really don't have the scale to provide these things themselves. So to have great food offering on-site outside the door, to have the kind of the bars, gyms and actually facilities like this. The storey customers are kind of used to the concept of sharing. So they will take advantage and it's really important. I think equally important or if not in some cases more so is the community that surrounds them, professional network. And that might be to share problems, kind of bounce ideas off with a kind of a fellow Storey customer going through a similar stage of their journey. But more uniquely for Storey is having access some of the larger customers across the British land portfolio. So if you're, say, a fintech company down at Broadgate, to be sitting next to some of the world's largest financial institutions and being able to be in the same network is really important. They might be a potential customer or they might be a potential investor. Emma, early days obviously, but current view from you of the likely occupier mix at Canada Water? It's very early days, but we've still had some really encouraging initial conversations from quite a wide range of different businesses. And I think what's striking is that actually they all, despite them coming from different sectors, have kind of a number of themes in common. I think, firstly, there is a sense from these occupiers that they want to be part of something. And at Canada Water, there will be a story that unfolds as a new town is created, and that's quite attractive to businesses to be able to resonate with a place at the start of its journey. I think the other fairly self evident point, if you look at the kind of issue of residential affordability across London, Southeast London has remained relatively affordable for normal Londoners. And as a result, there is a huge pool of talent in Southeast London. And being located near that and able to access that is definitely attractive to potential businesses who are thinking about their future talent. And I think the third point is back to something that Mike mentioned around the shortage of supply. We have got about 2,000,000 square feet of workspace in the master plan. Where else in London is that substantial amount of space that offers businesses who are looking to grow the chance to kind of take some space and then grow it over time? That will diminish as the site gets developed out. But at this stage, I think that flexibility and the quantum of office and workspace is really attractive. And Claire, everyone will hear later in the breakout about our plans to develop a new town center down there. So retail is going to play a key role. Any early thoughts on the nature of that retail at Canada Water? I think it is early. The we've got the ability to add about 1,000,000 square feet of retail, leisure, food and event space. And I think the local community is quite interesting. There's 30,000 people in the community already. So I think it's really important that we address their needs. Reimagining future town center, I think, is quite interesting. Looking at convenience, looking at the services that they need to support them is very important. But at the same time, we've got the opportunity to create a new district for London, which I think is really exciting. And Emma talked about the green space and the water that we have. And I think that gives the opportunity to do something really quite unique there. So yes, I think the opportunity is huge. And Emma, you're at a pretty key stage of your process right now. Any updates? We are. Well, September is a key month for us. We have a planning committee confirmed for the twenty fifth and the September 30. It's a two part committee to determine both the outline master plan, which was the sort of substantial part of the planning application, but in tandem, a number of buildings that have been designed in detail, which will form part of the first phase. So assuming a positive endorsement at the end of the month, there's then a process of potential referrals to the Mayor of London and thereafter a process for us to draw down our head lease from Southwark Council, which is contingent largely on planning. And assuming all of that runs to plan, then the planning application and those three plots that have been designed in detail kind of leave us well placed to be able to make a start on-site in mid-twenty twenty. Tim, you've just taken on responsibility for a broader group of assets. Retail market backdrop is pretty challenging, obviously. How do you feel about increasing exposure to retail at the moment? I think, clearly, there's a lot written about retail right now. I think in terms of how we operate our campuses, I think that does fit into a bit of a subsector in terms of the retail market. I think the big differentiator is the fact that you have a captive audience on-site. So here at Paddington, we have 10,000 people who walk past the retailer's front door every single day. You have another 20,000 people who are in Eastbourne Terrace and also Merchant Square, where there's a limited retail offer. So all those guys come to us as well. So as a retailer, that's quite a nice story to have. And we've also put quite a lot of new retailers in. We worked very hard at the outset in terms of making sure that they're a different operator and a different offer to what we've got currently. They've got a strong business model, and their brand and marketing is right and is going to work through. And we also work with them in terms of making sure that marketing at the outset is really strong, and we bring that customer base in and it meets our requirements. So I think, so far, we've attracted some good operators, and they're trading well. Claire, you live and breathe this every day. You agree? I do. I think the great thing about our campuses is they sit above transport hubs, and that is where retailers are looking to expand. And I think the best evidence I can give you is what's happening at 100 Liverpool Street with the leasing there. We're letting we've got something like 26 retail units within 100 Liverpool Street, opens next year and we are letting it rent between 100 and £300 per square foot. So there's demand. There's demand from really good retailers and we're getting very strong rents. I think the other thing to look at is the performance. Broadgate Circle is an example. That's all food. Food and leisure, that's about 30,000 square feet and turns over something like £32,000,000 a year. So you're looking at trading densities of on average of over £1,000 per square foot. So in terms of the success of retail, I think the campuses provide a huge opportunity and that's borne out by how well we're leasing at the moment. And Tim, more broadly, in terms of development, does the market still feel supportive? And as a follow on, something I know this audience is interested in is how you think about returns on those developments. I think Mike's covered it in terms of the West End and the city markets at the moment. Terms of London, it's a very supply constrained market. That's really, really good. There's a lot of pre lets happening within that space as a result. So I think that's a big positive. I think when we're looking at our new developments, that's clearly an important factor. We will also look at pre let opportunities within that as well. And then also, we'll look at the importance for the overall campus strategy and how that feeds into ongoing rent reviews and asset management initiatives. So I think in terms of numbers, let's use an example. Let's use this building. Back in 2014, we decided to press the button on it. That was in a constrained West End market. That was on the back of a number of rent reviews across the campus, I think about 14 in total a couple of years afterwards. So we wanted to create some new evidence on the campus. And so we had numbers wise, we had profit and costs of about 15%, an IRR of about 12.5% and then a yield on costs of about 6.5%. So kind of fast forward kind of two, three years after that in terms of when we PC'd, I mentioned previously it was pretty much all pre let, which was great. So we let it a lot quicker than we thought. We let it at substantially better rents than we thought and the whole market thought. And then combined with yield shift and the fact that we actually built it on time and on budget, we had profit on cost of just over 75%. So really impressive numbers. Clearly, we're not going to do that across our portfolio. But looking at, I guess, our current development pipeline, so at Regent's Place, we've got one Triton. And at Broadgate, we've got 135 Bishopsgate, 1 FA and 100 Liverpool Street. Collectively, those give about a 20% development profit. James, you've been helping run story since day one, helped conceive the idea. You're now over two years in. If there was one customer anecdote you could use to kind of summarize your story to date, journey to date, what would that be? Actually, was going to just pick up on the point, cheesier one, the very the story name, the kind of the brand name was all conceived around developing stories of our customers. It's nice to kind of to finally have some. I think a good example of that is Starling Bank. It's the sort of digital retail bank. And they initially came to British Land down at Broadgate in one of the buildings, two FA, on a conventional lease, so no services, but quickly outgrew that space. Eighteen months in, outgrew. In the same building, we had some storey space, which we were quite we were able to flip them into that space. So they kind of grew at that point taking services, at that point access to shared space that kind of met their needs at that point in time. Around ten months later after that, they might they landed about 175,000,000 worth of funding. They started growing very quickly again. And we worked with them to do more of a bespoke solution on another floor, which came available in that building actually back to back to another lease. So this time fitting something out for them on a bespoke basis, running the floor for them, which again so collectively they sit in the building now across sort of three different products. And I think what's really nice right now, we're in conversation with what that and what's that next step. And when we're having that conversation, it can be there's a range of different buildings down at Broadgate, a range of different price points and we can offer them a range of different products, which is pretty exciting. Thank you all. I hope that's been useful. I've enjoyed asking the questions for a change. Normally, I have to answer them from you guys, so that's been good. But now you get a chance to ask some questions because Chris, Mike, Darren will come back on stage. They'll be joined by the panel. Happy to take any questions on what you've heard so far before we move on to the next section. Thank you, guys. It may be counterintuitive to you why these guys are taking their microphones off. The hardcore facts are we don't have enough microphones for everybody to be miked up. Anyway, so it will be a brief moment. Yes, we are going to we are, as you know, going to have another session on Retail. So in this without trying to guide you too much, we'll probably stick off Retail a bit, just questioning, just because we're to give you more information. I don't end up repeating what Simon's going to say later. But obviously, within that constraint, we'll take whatever questions you like. Usual rules apply for those who worked with me before. I take the difficult questions, the panel get the easy ones, and Simon gets all the really hard ones. So that's supposed to work. I love it when a plan works out. So ladies and gentlemen, questions? If there are no questions, we can move on, but I'm assuming there's going to be something here. Right. Gentlemen, almost at the back. We've got a microphone. Hello. Adam Hetherington, CBRE. You've been super successful on your committed development program. So if you're 85% let, you've got 59%, I think, allocated to Storey. When are you going to commit to the next phase and where is that going to be? That's a great question. I think as we kind of hopefully, Mike showed a little bit, what we're very pleased about is that we've got a number of developments to come, as you know, Adam, and that range is kind of from a near term pipeline or near term opportunities, particularly more buildings at Broadgate as well as at Norton Foldgate. Our view is that and I would say on top of that, that we've got some really interesting pre let type discussions going on in several of those places. And so at the moment, we are kind of proceeding on a basis to get ourselves ready to develop. As you know, we're in a relatively tricky time in terms of the external environment right now. And actually, right now, we can proceed on most of these things without take we can proceed without actually having to take a final decision to go, no go. And I think at the moment, it feels kind of if you don't have to take a decision given what's going on at Westminster and yet you cannot slow yourself down, that optionality that you all, I think, have heard me talk about feels pretty good. The obvious other place to just touch on, as Emma did, is Canada Water. I think there, all of our instinct would be to start as and when we're ready to go, subject to any caveat of some real kind of catastrophic set of mistakes down the road because sooner or later, we have to create momentum down there until you actually start. It's going to be hard to convince anybody that we're going to start. So that would be kind of Simon. Don't know if you have I missed anything, Mike, anything? But that's a general sense of how we're thinking right now. And it does feel like we do feel like we're in a different position than a lot of other people because I think a number of other people assumed that there'd be some drop in the market, you could restock and then you'd be ready to go. And as you know, that hasn't really happened. So there is a dearth of kind of connected opportunities and developers. And we are not in that position because we didn't take that view. We are in a position where we've got plenty to be getting on with. Next question. We've got I think everybody knows we're taping this session, so if you want to give your name, then you get the opportunity for people who listen subsequently, they know who it was. Ben Richard from Credit Suisse. Clearly, the strategy is evolving more towards mixed use and kind of to borders a blank canvas in a way. I just wondered to what extent you might embrace a wider variety of mixed use. Alternative real estate sectors are potentially more interesting today than core industrial servicing online through logistics, etcetera. So there's plenty of areas of mixed use that you're not addressing. Sure. I mean, Emma, maybe you want to start on with respect to Canada Water. And then if you want to take any more I think point I'd make about Canada Water aside from the one you noted about residential, is it's a pretty broad consent. It's an outline application with what's called parameters, which allow us to effectively pick from a menu of different uses, including the traditional British land ones of workspace and retail and residential. We're also able to provide cultural education spaces and we're actually with some early discussions with a university operator who's interested in some academic teaching space there. So I think Canada Water is probably somewhere where we've got the greatest flexibility to do that. And indeed, even within the residential space, build to rent, we've talked about a lot, but actually, there are other products within the residential sphere, senior living as one example, which would enable us to serve a much broader customer base than the sort of the traditional residential market and house builders have perhaps in the capital to date. So I think there's quite a lot of scope. And importantly, with a flexible planning permission, we can kind of take those decisions when we want to over time. We don't need to necessarily make that call right at the outset. Behind. Maximo at Kempen. Just to kind of follow-up on I know it's early for Karen and Water, on those residential discussions, I think some people have come up against some particular issues with the boroughs. For example, I think on ex industrial land, and I don't know whether print works comes into this or not, you have to have up to 50% affordable housing. How are those discussions evolving at this stage? And how is that changing? Because obviously a lot in the media right now. I mean, can talk much more about Canada Water in the breakouts because I suspect there's a few questions. But to answer your point directly, the Printworks is semi industrial, but given the leasehold interest that we have there, we have agreed with the GLA and with the borough that it doesn't constitute industrial land for the purposes of the 50% affordable housing requirement. So we are providing 35% which the GLA and Southwark have accepted. I think that the only point I'd add to Emma's point is that bear in mind that we have quite a lot of flexibility as to which use we put it. And although we're giving you outline numbers, the actual number of housing units is minimum is quite low. So that, in terms of the impact of the 35%, mathematically, is quite important to bear in mind because and those range will obviously depend on, over time, the relativity between the sales price of housing, rental price of housing versus the other uses. And that's something, obviously, we're well used to those combinations. Never, I'd say, in this company's history have we had quite that degree of flexibility because it's there's nothing much there today. Yes. We'll go right there and then we'll come forward. Bart Gysons from Morgan Stanley. If Canada Water is de risked effectively later this month, Would that mean that you could consider buying more sites like that if they were to come available? Or would you mainly deploy capital into your existing sites in order to make them more mixed use? I never really thought, but you'd be asking me as if I 50 acres might not be enough. But I think, as I said, what I would reiterate and that we are in a great position because of that optionality. I do not feel there's any need to go into the market. We've got plenty to exploit today, both at Canada Water but elsewhere too. Having said that, we unequivocally have a skill set that allows us to do this. And one thing that is clear to us because we get the incoming is quite a lot of people like the partnership that we can bring in terms of the people skills all the way through that you're kind of hearing about today. So if we get approached for people who say, look, I've got some land or I've got some buildings that need redeveloping, would you come and take a share of this building and do the work for us? That's something we would certainly contemplate because then obviously your in price isn't quite so important. And look, we do see and Sally is going to talk a little as Head of Investment, it's not really her subject this afternoon, but we are seeing some interesting things out there in the market right now, but what we haven't seen is any real fall of price of any materiality. So we're happy where we are today. Thanks. It's Rob Jones at Deutsche Bank. We've obviously or you've obviously talked a lot this afternoon about the significant office leasing success, particularly in the development pipeline. But one of the ways when I look at the phrase, places people prefer is around obviously clearly not just the kind of curation of, environments and curation of space for your tenants and your campuses, also around the internal environment within those offices. And was wondering if you could talk a little bit about the secondhand space that's effectively coming back to the market, I guess, across your portfolio and the extent to which as tenants are thinking more and more about their ability to kind of offer the best in class space for their employees, what that means for you? Does that mean we see an environment where secondhand space sees falling ARVs and potentially rising yields or an increased need for CapEx from a landlord's perspective? Or how are you seeing it evolve I guess, Yes. Today and going So I think it depends on what's coming back and what the plans are to do with that building. I talked about that sort of flight quality best in class product in whatever we're delivering. And in some cases, that means delivering buildings like 1FA, which is a refurbishment. We've targeted our spend, but we've secured long leases, and that's what we're planning to do. Next door to that, we've got something very different in 2FA and 3FA, also buildings that came back from UBS, where we've spent money in a very different way, but we've been able to offer something at a very different price point for a different audience who wants different types of flexibility. And I think that flexibility within our business to be able to approach things in different ways is really, really important. And when I talked about the demand we're continuing to see, it's really good for what we've got left in those developments, but it's good in this sort of lower cost refurbished space, where we're getting space back, thinking about what we're delivering, whether it's at 338 Euston Road over at Regent's Place, where we're reusing elements of the fit out to deliver this fitted product, deliver it on a short term basis or the longer term refurbished stock that we're doing elsewhere. Darren, anything to add? The only other thing I can add to that is that if you have a look at a place like Borggrades and you have a look at the average rental tone now, I think we've average rent passing of under £50 a square foot, an average ERV in the mid-50s. So there's a lot of potential there. And I think Mike and his team, and Mike's just answered the question perfectly, is that we've already demonstrated we can succeed in that space. And we're getting very good at repurposing buildings, so there's a lot of potential there. I'll just add one point extra, which is if I look at this business seven or eight years ago, it's fair to say that we did not have the depth of relationship. I talked about those relationships, which wouldn't allow early discussion of a customer's issue. So for example, six years ago, when we bought into Paddington Central, the first thing we actually had to confront was a lot of gray space that we didn't really know about. And the result was the organization that had the space were kind of letting it at any price they could get. It is very difficult to build rental tension in that situation. Not only would I hope that we wouldn't be surprised in that context, our whole organization that Darren's responsible for is our asset managers owning those relationships with existing tenants. So they are expected to have those discussions. And obviously, we now have the tools in a sense of something like STORI. So we can say to people, well, maybe we fit it out for you and we run it, and if there's a temporary period. Or let's work with you, Mike talked about, let's talk about what space you're actually going to need and then talk to you early about how we might take that space back from you on a phased basis and we can be starting to pre let or think about it. That is a very different dynamic and helps to control properly control the space. And I think that's a big jump forward for us organizationally and I think it's really something that I would argue not many people are trying to do effectively. So it's good to see some familiar faces in the audience. And I say, Crystal, my introduction, so I'll skip that bit. But so you won't be surprised to hear that a core part of my role in strategy is to ensure we have well thought through and executable strategies to respond to both near and long term trends. The long term trends at the core of the strategy over our last ten years have included all the things you see on the screen here, and you won't be surprised by these. And our approach is to try and look a little way out, but we try and avoid to be too blue sky, and we only really go deep when we think it's actionable. And clearly, right within your radar screens and which are woven through today's presentations are the impact of technology on retail. We've done a lot of thinking in this space, as you'd expect, and changing customer needs in the workplace. You've heard all about that from Mike. And my team has been heavily engaged in our workplace strategy in recent years. And as some of you may know, STORI, under James Lowry, was seeded in strategy. So in this session, we'd like to focus on two areas which are already impacting real estate, but which we think will have a much more profound impact going forward. And that's the application of technology in the built environment and sustainability. There's quite a lot of technology which applies to insights and to SMART, so I'll talk about that a bit before introducing the other speakers, and Simon will introduce sustainability. So after agriculture, the property industry is often said to be the least developed from a tech point of view. It's a long term business and buildings don't go up overnight, which in part probably explains why we are where we are. And we've been focused on tech strategy for quite a while, and we've been doing more than some of you might expect or realize indeed. We have a highly structured approach, which helps us coordinate and prioritize our effort. And it's easy in this space to be overwhelmed by the sheer volume of potential opportunities we get to see. So we've taken a deliberately top down rather than a bottom up approach, which is to mean we don't spend our time scouring the market for start ups. And if we've learned anything from the tech revolution of the last decade or so, it's this: First, it's the power tech has put in consumers' hands. That's why we talk a lot about customers. Second, how easily intermediaries have had their businesses disrupted. And third, that the biggest winners are those who've used tech to deliver great customer experiences. So think of Amazon, Netflix, Airbnb, Expedia and closer to home, right move. And with that in mind, we have three core guiding principles, and you should remember these because it will it defines how we do things. And these are shown on the right hand side. First of all, we want to strengthen our relationship with customers, not diminish it. It's why we created STORY, it's why we have an insights team and a smart team, and it's why we in source property management. Second, we want to own our own data. And with the data warehousing and analytics capability we've created, this allows us to aggregate and manipulate lots of different data and importantly, to look across our portfolio. And you'll see later from Ben in this session and in the breakouts why this is so important to us. And third, recognizing we're not a tech company and there's lots of VC money pouring into the PropTech space, we want to leverage that investment. And this means we may look for more partnerships and collaborations in this space, and it's why we've invested in Fifth Wall, the VC PropTech fund. We're really positive on the benefits tech can bring to our business, principally because it will help us better serve our customers. So in a very tangible way, it helps us understand our customers better. It allows us to provide our customers with a better experience and will also help us make our buildings as well as our business more efficient. And by helping us use space and resource space and resources more efficiently, tech will also help us meet the challenges of climate change. And importantly, the benefits of technology are amplified at a campus level, All those things you heard in the previous session, the things which make our campuses so special, are significantly enhanced by tech. I said earlier, we've been doing more in this space than some might realize. We think we've made good progress and are toward the leading edge in the PropTech space in the PropCo space, sorry. And we're working collaboratively with some of the biggest global PropCos like Brookfield and BlackRock, and we're sharing learnings. But they're also specifically interested in some of the things we're doing. And counterintuitively, our smaller size and concentrated business has made it easier for us to progress some initiatives. Today, we're going to focus on two elements of tech in the built environment, and that's insights and smart places. They sit within the strategy group, as Chris said, because they're interconnected disciplines in terms of skills and focus. And secondly, it effectively brings strategic innovation into a central hub where it can get focus and sponsorship. And we supplemented this with the creation of a tech council, which allows us to manage and prioritize centrally. So the Insights team led by Ben Dimpson is now five years old, some of you have met him before. And the Smart Places team led by Jules Barker is just over a year old. Both Ben and Jules have a background in consulting. They started in the strategy team as well as wide ranging operational experience both within BL and elsewhere. And they've both been instrumental in elevating these areas within the business. So insights is absolutely plugged into our day to day thinking and decision making, and smart is now integrated into how we think about delivering new space, as you heard from Mike. So with that, I'll hand over to Ben. Thanks, Sally. Four years ago at our Investor Day, I spoke to you about how we were starting to use data and insight in our business. Since then, we've made some great progress, and we're using these tools both strategically for decision making and in day to day operations. In the next few minutes, I'm going to talk to you about what we do. And if you haven't done so already, you'll have the opportunity to meet the team outside and see some demonstrations of different tools that we've developed. We create insights from research and data. First, that helps us to understand the needs of all of our stakeholders so we can innovate and evolve our offer. Second, it strengthens our own decision making so we can challenge traditional approaches and supplement them with new ideas. That generates incremental value for us and our customers. I'll demonstrate how our activities support profitable leasing at Meadowhall and help us to maximize returns from developments such as Candlewater. Later, Sally will show how at a portfolio level, we use data to inform our capital allocation decisions. At Meadowhall, we use data to understand our catchment and also our market positioning. We merge anonymized mobile phone and credit card data with traditional sources such as exit surveys. We know at an aggregate level who shops our sites, where they come from and also where else they spend money. This data allows us to target pockets of potential demand, particular retail categories, socioeconomic groups or shop emissions. That informs both our leasing and marketing strategies. Suppose we find an opportunity to target affluent shoppers to the Southwest Of Sheffield. We'll find appropriate brands that fit the group, say Hobbs or Whistles. We then work with the leasing team to create a compelling case for that potential occupier. So for example, we might model expected turnover to come from the store or we might look at the online sales that having a physical store might generate. If there are specific concerns that a retailer has, we can model those too. So for example, we might look at potential cannibalization to an existing store portfolio. We'll then think about the optimum locations within a given scheme that an occupier will thrive in. So we might use Wi Fi or shopper journey data to optimize where we put the particular brand to fit the consumer. In the case of Hobbs and Whistles, that was within Park Lane, the premium section of Meadowhall. Prior to launch, we'll share our detailed understanding of our catchments so that occupiers can have the strongest possible launch whilst being mindful of both our and their GDPR obligations. So to give an example, for Rock Up, an indoor climbing experience at Meadowhall, we help them to work out precisely where to place their billboard advertising and also do their leaflet drops to make the most of their launch. Once the brand's in situ, we continue that relationship by providing them with data so that they can work out their own performance. So using our BL Comm app, which you can see outside, we capture sales data and sales densities, which allows an occupier to see how they're doing and benchmark their performance against peers both in our center and nationally. That's got real value for them at a store level as well as HQ. This continuous source of data allows us to attract more of the right kind of footfall and spends to our assets through our asset management and also marketing initiatives. And we're really seeing the impact of that on our own operational performance. As Darren mentioned earlier, at Meadowhall, we've had thirteen consecutive months of footfall growth. Q1 like for likes were up 2.6%. That's six seventy basis points ahead of benchmark. And we're achieving lease renewals and rent reviews ahead of ERV. The process is well established at Meadowhall, but we're also using it on our campuses like Broadgate. Here, it's been integral to the leasing we've done at 100 Liverpool Street on the Ground Floor. Turning now to Candlewater. We started here by really understanding the local community, who the employers and workers are, who resides there and visits, what the current provision is for retail and leisure. Then we've modeled a range of development scenarios, taking into account other people's plans as well as our own. By really understanding how these demographic changes will be shaped, that gives us a handle on how demand will evolve. We submitted detailed planning, as you've heard, for the first three buildings. In Phase 1a, we'll be adding 29% of workers to the area. However, the exact type of workers that we attract could be very different depending upon the industry mix. So to understand that point better, we surveyed 1,500 London office workers across Zones 1 And 2 to really understand their wants and needs from their office space and see how that differs based upon seniorities, demographics and the sector they work in. This provides valuable insights as to how the population can impact the blend of uses we provide and specific operators. So for example, a technology, life science, government or higher education hub at Candlewater could want a different mix of retail, leisure and community users and different operators within them. Our model informs both the quantum and the nature of space that we deliver, whether we target the likes of Uacha, which works well at Broadgate, or whether we look for different kind of restaurants that might be more affordable or more individual for Candlewater. And we supplemented this insight with more traditional community and user surveys to really start to target specific operators for our spaces. And there's more to come in the toolkit. Looking forward, we're going to use focus groups to help define and refine the brand proposition. We'll use big data to really understand how a site is used to optimize it. The process is going to be iterative. It will evolve as our vision evolves, for example, with a major pre let. And so we will ensure that our decision making is always informed and up to date. Hopefully, that gives you a flavor not only for the insights that data can generate but has been used day to day in our business, creating value both for us and our customers. I'll now pass to Julian, who will tell you a bit about Smart Places. Thanks, Ben. So smart. Now I know it's something of a buzzword in the industry. So to begin with, I thought it would be useful to explain what we mean by smart. For British Land, smart is about using technology in the built environment to make our places outstanding. If you like, digital place making. The property industry has been on a journey over the last few decades, starting with a focus on the physical, top left, great places in great locations. And then layering on this, the growth of human centered design in those great places, designing in a sense of community and well-being. And the digital is the next stage on that journey, using technology to create seamless and efficient space, digital placemaking. So why does it matter? We think of the benefits across four key groups. To begin with our occupiers, smart helps them use space more effectively, so operating costs are lower. It also helps design and build brand enhancing space that attracts and retains talent by creating great places to work. For our customers, the users of our space, SMART is about well-being and productivity, seamlessly personalizing our own space. And for society then, as you heard from Chris and from Sally, sustainability is incredibly important to British land, and smart is a crucial pillar of how we're going to achieve that. Smart can minimize the energy cost of running space and help nurture a sense of community. Lastly for British Land, smart is a strategic differentiator for us. It allows us to become closer to our customers, reducing the risk of disintermediation and contributes to creating outstanding places with strong rental growth and valuation performance. Fundamentally though, smart matters because demand is growing from all of us for seamless connected spaces. Think about how your home, all of our homes have changed over the last ten or fifteen years, the power that technology is giving us. We've got Nest so that we can control our heating and economize it over time. We've got smart TVs with millions of on demand films at our fingertips. We've got Ring doorbells so that you can monitor your home securely and remotely. And we've got Alexa so that you can control all of these and more with your voice. Technology is making all of our lives easier and giving us more control. And by contrast, a typical office. Now this is from the 1980s. It's over 30 years old. But I wonder for many of us how much our work environment has really changed in that time. And collectively, we're all beginning to react against going back in time when we go to work. So how is British Land delivering smart? We're working across these three pillars. First, the hardware. This is network. This is connectivity. It's things like lifts, air conditioning systems and sensors. We're specifying the right hardware to enable us to read data from across the building systems and then write to it to control it remotely. Second then, the data environment. We're upgrading our existing environment, which already gives the kind of benefits that Ben has just spoken about. And we're adding in the ability to process building systems data two way in real time. And that will help us understand how space is used and then optimize it. To start with, that optimization is user driven, but in time, it will be automatic driven by AI. Third then, the user experience. We're designing and procuring dashboards and apps, which demonstrate how space is used and will enable users to manage it themselves. For example, booking desks, booking rooms, changing the temperature, which I think we could do within here, joining local clubs or signing up to events. So how are we doing that in practice? 100 Liverpool Street. We're embedding this approach through the core areas of our building. Best in class network and connectivity today and with room for growth built in. Base built hardware integrated into a stand alone data environment. And in terms of the user experience, bespoke dashboards and control software. In addition, at the same time across the rest of dashboards and apps, which when they're ready, roll out across 100 Liverpool Street and Broadgate. Now as you know, we committed to 100 Liverpool Street in 2016, and it completes in around six months. That's over three years, which is obviously a lifetime in tech. So we've devised this kind of modular approach, which will allow us to plug in and out the best in class in the most flexible and efficient way we can. So what does the future look like? What does a smart British land campus look like in, say, three to five years' time? A few highlights of the more detailed version you should have in your handout. Already today, we offer world class welcome. So your visitor has e mailed a digital pass similar to the one you should have received for today, and the host is automatically notified when they arrive. We've also completed trials in our own headquarters, installing sensors so that we can understand how we're using our space in detail. And as Mike alluded to earlier, we've signed our first occupier to work with. We've installed sensors in their space and we'll work with them as part of the regear that Mike talked about earlier. Within the next twelve months, we'll be rolling out apps across our campuses and customers will be able to do things like order and pay for food, join local clubs and events and control and access their space automatically. Longer term then, we'll be working on AI, things like voice assistance in meeting rooms and machine learning, managing and controlling and optimizing building systems. Now all of this is still at a very early stage in our industry, but there are two things that I'd leave you with. The first is that, as Sally said, we believe that we're towards the front in terms of both thinking and action in this space. The work that I'm leading is building on several years of thinking from the strategy team and action in terms of creating and embedding a data and analytics capability led by Ben. And the second thing is that smart, the power of smart is not in a single smart building, but in being able to create a network of connected digitally enabled space across London. And that's what our campuses, our network can provide. So just going to give a quick intro to this other section on sustainability. It's one of the long term trends Chris spoke about alongside technology. Key point on sustainability is it's not new to British land. It's been embedded in our approach for a very long time. It's a core element of our purpose. Our purpose is to create places people prefer, and people prefer sustainable places. When we think about sustainability, it's in its broadest sense. It's not just about managing and minimizing our environmental footprint. It extends to our communities. And we want to help those communities to thrive. We take it very seriously. At board level, we have a dedicated CSR subcommittee. And what I want to do today is introduce you to the two people who lead on a day to day basis. There's Cressida Curtis. Cress is our Head of Sustainability and Public Affairs. She's going to speak to you about our strategy, our targets and how we're delivering against those targets and then give you a bit of insight in what to expect next from us. And then there's Juliette Morgan. Juliette, until recently, was running the Regent's Place campus. And she's moved into a new role in the business, which we're really excited about, which is Head of Sustainable Development. Juliet is going to talk about how we minimize that footprint, how we tread gently on the planet. Cress, over to you. Hi. Thank you, Simon. I'm going to spend just a few minutes walking you through how we think about sustainability at British Land, the impact we can have and our direction of travel as we are approaching the end of our current five year program. Now sustainability has been a specific focus area here at British Land for well over a decade, as those of you who follow our reporting carefully will have seen. But its recent rise up the national agenda is, in our view, due to two specific things: firstly, a growing sense of unease in society about entrenched inequality and second, a growing realization that climate change is happening. And we all know that it will disproportionately impact those who already have the least. So from our perspective, environmental impact and social contribution are knitted together. And these themes are reflected in the evolving expectations of our stakeholders. So customers care far more about the impact of their purchases. Employers know that employees quite often want to make a difference through the work they do, so employers are using their environmental and social credentials to attract the best talent. Communities are demanding far more from the companies they see making profits in their neighborhood. And investors, as you will know, are more mindful about where they put their money. And every established U. K. Political party is responding to this shift, but also to the fact that The UK simply cannot meet its environmental commitments on an international scale without a change in behavior. We expect them to do this through both tighter legislation but also through incentives. So on every level, across our stakeholder universe, it's in our interest to stay well ahead of this agenda and also to inform the debate using our experience of what we know works. So sustainability is firmly on our agenda as a business and a very active conversation within British land whenever we think about creating places people prefer. But I took a wild guess that this audience would like some data. So five years ago, we set ourselves some really stretching targets, and you can see their breadth here. We're doing very well with most. We've delivered a couple ahead of schedule. And some, because these are stretch targets, are proving incredibly challenging. You can read the full detail in our annual sustainability accounts. So rather than dwell on this slide, I'm going to explain about how we think about sustainability and the impact we achieve today. Looking first at environment. Some of you will be familiar with the chart on the right hand side. This shows global annual temperature anomalies against the twentieth century average over a period of about one hundred and forty years. And as you can see, the last forty two consecutive years have returned above average temperatures. And on its simplest level, this is driving the climate debate. So why is this important to BL? Onefive of The U. K. Emissions come directly from the built environment. And of that onefive, roughly onefour come from development activity and the rest is from operations. So we've been very focused on reducing our operational footprint. And to date, we've succeeded in making our portfolio 44% more efficient per square foot. And that's before we even start to think about what we could do using Jules' smart technology. Combined with decarbonization of the grid, this 44% translates into a 64% improvement in carbon intensity. That's an improvement of twothree in just one decade. And we're now able to accelerate progress on our developments as well, as Juliet is going to give you some color on in a minute. Next year, we're going to be really proud to complete a deep renovation that exceeds the standards of the 2015 Paris Accord. It's the very first one we know of in the country, and we'll look to deploy what we've learned on delivering that building throughout our redevelopment pipeline using our sustainability brief for development, so our standards just keep increasing. Looking at social contribution, which, of course, is a much more nuanced area. Emma mentioned earlier that this is crucial to success at Canada Water, and we take this view right across our portfolio. Why do we do that? Because maintaining really strong local connections ensures that our decision making is absolutely in tune with the local vision and narrative, and that builds our reputation and reinforces the license to operate, which Chris mentioned at the start of this afternoon. Now our challenge is to make that as streamlined, as efficient and as meaningful as possible. And we do this through the local charter, which is our bible but much shorter. It guides our asset teams to the five areas where BL as a business can make the most impact, but it empowers them to tailor their activity to the characteristics and the needs of their specific place. And I'm going to give you two quick examples on this. So at Fort Kinnaird, which is a fantastic retail asset up in Edinburgh, which was mentioned earlier, One in six households in that community have no adult in work, which is a real problem. So for the last five years, we've been partnering with three local authorities and the Department for Work and Pensions on a retail and skills center. And that ensures that people in the local community can get training on the right skills that they need to access the jobs that are being created at Forcon Ed. It's helped well over 1,000 people into work already. It's made a meaningful local difference. And importantly for us as a business, 90% of our customers at Fort Connaire use that as a key recruitment source. Second example, possibly my favorite at the moment, is our Young Readers program. British Land has helped 40,000 children to improve their literacy skills in the last few years. Literacy is a key life skill. It improves access to opportunities throughout life and increases life expectancy by as much as twenty six years in The U. K. Eight years after we started the program, it's particularly exciting because the very first cohort of primary school children who went through this program on just this summer entering the workforce. That really demonstrates our long term ethos that we can take as a long term investor in our places. We make considered investments to generate sustainable social value that benefits individuals, the communities and our business. And creating such a direct link between British land and local prosperity is absolutely front of mind as we design our next steps. I've spoken about energy audits, operational efficiency, the local charter and our progress on developments, which is driven by the briefer development shown here on the right of center. And the final tool in our kit is the well-being principles. These underpin every design decision that we make, so our places automatically support the physical and mental health of those who use them. Well-being is literally built into our portfolio. And Paddington Central is a superb example of this. You've seen in Chris' section earlier the sterile environment it used to be a few years ago. And using our well-being principles, we've transformed it into one that's proving highly attractive before, during and after the working day and contributing to delivering those IRRs. I mentioned that we're in the final phase of our current program, and we're consulting on our next steps. And some of our major considerations are on the screen. Most important among these is alignment to the priorities of all our stakeholders. We believe that where we can help them achieve their ambitions, we'll also deepen our legitimacy, future proof the business and accelerate progress. And we'd love you to be involved in the process. So if you are interested in being part of that conversation, please do let me or David know. I hope that's given you some insight into the work that we do, but Juliet is now going to give you some examples of how our environmental thinking translates on the ground. Hello. I'm very worried about your sustainability and that I'm the thing between you and a cup of tea. I'll spend a few minutes talking to you about the global carbon context and some of the, frankly, very cool things that we're doing with across the business to reiterate what Simon said about treading more lightly on the planet, but also how that meets some of our customers' needs. So I wanted to start here. You've heard from a number of us that sustainability is a mindset at British Land. And before we do anything, we look at our place in the world and how we make a positive impact. This slide refers to a project called Drawdown, which is the biggest scientific peer reviewed project in the world to look at how to get carbon out of the atmosphere. There are 100 initiatives in this project, ranked by how much each impact can have. And interestingly, in the top 10, the real estate industry can play its part through reducing refrigerant management and thinking about rooftop solar. It's not actually until you get to numbers seventy nine and eighty that they start to mention refurbishing buildings and net zero buildings. So the point I'm trying to make is that we can have massive impact across the portfolio without reengineering everything we do. You'll be pleased to know not all of it has to be very expensive. LED lighting, smart meters, walkable cities and green roofs all contribute to decarbonizing the atmosphere. So we try to think more holistically about our impacts and where we can invest that's both at building and neighborhood scale. And the initiatives on this slide are all the ways the built environment sector can play its part. Rightly, there's a drive across the industry to get to net zero carbon in real estate. In reality, it's really difficult to achieve given that we mostly build out of concrete, glass and steel. But BL has been a pioneer in acquiring our first timber and steel building. Timber or cross laminated timber is seen as a key resource in decarbonizing buildings, and the fire risks have been engineered out. It's also cleaner and faster to build. Oarsman Road was bought for Storey and is designed by Warf Thistleton, globally recognized as leaders in cross laminated timber buildings. Beyond decarbonizing at materials level, we look at our impact at neighborhood level. Broadgate has been leading this for a long time, having delivered just over 1,600,000 feet of Brienne rated buildings. They saved 3,000,000 litres of water and delivered just shy of 20,000 feet of green roofs, which contribute both to biodiversity and insulation. In fact, somewhat amazingly, they've sent nothing to landfill for the last seven years. These are really easy stats to read and profoundly hard things to achieve, and the team have been dedicated for a really long time in reducing our impact. Sustainability isn't new to us at British Land. Elsewhere in the portfolio over at 1 Triton Square at Regent's Place, closer to my heart, we've approached the portfolio with the principle of reducing, reusing and recycling at building scale, retaining cores of buildings leased to an average carbon saving of 30% to 50% over a new build. And the team are really proud to be delivering our first BRIAM outstanding building. Building in this way is saving the equivalent of twenty six years' worth of operation of the building. At Regent's Place, we didn't stop there. Sometimes sustainability is about the things that you don't do. So in redesigning landscaping, we refused to replace stone with imports from China, instead retaining all that could be and minimizing imports. Planting over there is to be drought resistant to reduce water consumption and trees are being retained. They play a significant role in urban cooling, which will be needed. So we retain trees and plant more wherever we can. The landscaping includes edibles, partly to reduce bringing in fresh produce to the city but also is freely available to customers in the wider community, including those who are in food poverty. Mike mentioned 338 Euston Road, where we inherited fit out from Facebook. We've been working with a circular economy furniture provider who've restored all of the fit out that could be upcycled and employed local people on-site to upgrade what we inherited. This created jobs, reduced waste to landfill and reduced transport. And I know you'll be pleased to know it's financially sustainable too. Approaching fit out in this way saves us £70,000 and 12 tonnes of carbon. Furniture accounts for 30% of buildings' embodied carbon emissions over the life of a building. What can be retained at three thirty eight is being upcycled into our first 100% U. K. Sustainably sourced cafe and marketing space. This space is to be used by the wider community and has been an events and gallery space, a role it will continue to play once completed in quarter four this year. Materials used here range from recycled yogurt pots to crushed TV and mobile phone screens and recycled paint. It's another example of how we're trying to demonstrate leadership and tread lighter whilst giving back to our communities. On the subject of communities, here you are in club space. What you may not have noticed is the bamboo furniture as you came in. The team procured this deliberately as it's one of the fastest growing and sustainable materials on the planet and was a way to introduce this to our customers. Buying in this way supports forestry management and artisan producers in tropical forested areas. It shows our thinking extends beyond extends to considering our impact across the planet, not just what's in front of us, and we'll continue to explore this. So I hope that this has given you a snapshot into the diversity of ways we strive to reduce our impact in really practical ways. Our thinking is systemic at neighbourhood, asset and fit out scale. And whilst we look to reduce our footprint, we also look at the ways we can have social impact too. The communities team do outstanding work on creating social capital for our business, which translates to very tangible value in terms of planning consents, political relations and then deeply embedded in the communities we serve. Whilst there is a sustainability team, the mindset is pervasive and has been for a long time. Doing good work with low impact motivates us and is a driver for our customers, many of whom are challenging us to see how far we can take this agenda. So we'll keep challenging ourselves to see how light we can make our footprint and how well we can impact those communities. So I mentioned sustainability and my worry about yours. Can I invite you, if you have questions for us, to find those of us over a cup of tea in the next fifteen minutes? I know the data and insights team are demonstrating their technologies. And so the time now is completely invisible. Can I invite you back in fifteen minutes? Thank you. The first element really is buy and sell decisions. You can see that since 2015, we've been net sellers to the tune of £3,000,000,000 That breaks down into £4,000,000,000 of disposals and £1,000,000,000 of acquisitions. And with those disposals, we've locked in some very attractive returns, as you can see from the screen. But it's easy with the high profile transactions shown there to forget that we've sold over 130 retail assets over that period. So we've generated proceeds of GBP 2,200,000,000.0. And those disposals have been in line with book value. We've been thoughtful as to how we've used the proceeds from our disposals. One of the ways, as Chris touched on, has been to reduce leverage. Our LTV has come down from 35% in 2015 to 28% today. But LTV isn't the only measure of leverage we look at. It can be distorted by what's happening to valuations, particularly if there's yield shift. So we also look at the absolute amount of net debt in the business. This has come down from GBP 4,900,000,000.0 to GBP 3,500,000,000.0. Another measure is net debt to net rents. That was 8.5x in 2015. It's 6.5x today. So the balance sheet is in great shape. But we've not only used those proceeds to reduce leverage, we've also used them for value accretive opportunities, primarily developments and share buybacks. We're investing in our campuses with our development activity. It's a core part of BL's DNA. And since 02/2007, it's delivered £1,700,000,000 of development profits. We're on-site with 1,300,000 square foot today And our near term pipeline includes the exciting opportunities at Norton Folgate opposite from Broadgate and also 1 and two Broadgate. And if you take our near term and committed together, we expect these to deliver a further £300,000,000 of profits and a 6% yield on cost. And importantly, as you heard from Darren, we're 85% pre let on our committed developments. That's important because it locks in income, which will underpin the dividend in future years. In terms of medium term opportunities, we have a further 7,000,000 square feet of opportunity. And over 90% of that is at mixed use places. That's Canada Water, Broadgate and Paddington. And we're holding our sites at relatively low value and many are income producing. That gives us important optionality as to when we progress. Clearly, the biggest opportunity is at Canada Water and you'll hear more about this from Emma and Roger in the breakout session. So the third way we're using proceeds is buybacks. Importantly, we're not leveraging up to buy back shares. Each buyback has been linked to a particular property disposal. For us, it's about exploiting an arbitrage. It's an arbitrage between the price at which we're selling assets and the implied level we're reinvesting in our portfolio via the buybacks. We've bought back six twenty five million pounds worth of shares over the last two point five years. And because we're exploiting an arbitrage, we've locked in an increase in NAV of over 30p. And the look through property yield on those purchases is around 6%. But there are a number of things we have to consider with buybacks. And one of those is we've been clear we want to maintain the firepower so we can take advantage of that development pipeline. We also have an ambition to increase our exposure to our mixed use assets. And clearly, if we sell retail properties and reinvest in our campuses with developments, we move our weighting more than if we buy back stock. The third item is not really an issue today, but we've just got to be cognizant of it. If we sell properties and buy back stock, we shrink the company. And at some point, we could face potential diseconomies of scale. But overall, in relation to capital allocation, we've locked in some great returns and we've put the balance sheet in a very strong position. And that means we can take advantage of our medium and near term opportunities. So changing tax slightly. In terms of the retail operational market, retailers are facing a near perfect storm. Many people are obviously aware of this. There's been high profile store closure programs, CVAs and administrations. So demand is weaker, and that's having an impact on rents and values. And to be clear, we expect it to remain tough for some time. Our working assumption is that rents are going to remain under pressure for the next couple of years. But against that backdrop, the team continues to put in a very strong operational performance. And you can see that in terms of our occupancy. Our occupancies remained high at 97% and that's as at June. We've leased very well since year end with over 500,000 square foot of leasing activity and that's 3% ahead of ERV. But I know like us, you're interested in how that compares to previous passing rent. And if we look at our long term and temporary deals combined, we're 2% ahead of previous passing rent. But there's a wide range in there. And you can see it because if you look at the long term deals, they're 18% ahead of previous passing rent. And we're leasing for an average term of seven point four years. And our incentives have been stable at seven months. But on certain of our assets, we've got to be pragmatic and we're entering into some shorter term deals to get in the right type of occupiers. So if you look at the temporary lettings, they're 23% below previous passing rent. But importantly, we're not giving any incentives. So when you look on a net effective basis, that discount is smaller. Our approach is to make sure that our portfolio is full with the right type of occupiers. And you can see the benefits of this in terms of footfall. It's been marginally down over the last eighteen months, but there's massive outperformance compared with the market. And it's the same if we look for like for like sales. At year end, I mentioned that in Q4, our like for like sales turned positive. That was the first time in two years that had happened. And it's continued into this financial year. And again, you can see the striking outperformance relative to the market. I'm a new face to most of you in the room, so I'm Brona McKeon. And my role at BL is of General Counsel and Company Secretary, which makes me a lawyer and makes me someone who spent an awful lot of the last eighteen months working on CVAs. So like all good stories, let's start at the beginning. CVAs aren't new. They were born over thirty years ago with the 1986 Insolvency Act. And for people who follow this, the generally regarded grandfather of so called landlord targeted CVAs was JJB, first time around, back in 02/2009. And that CVA affected landlords but left other creditors unimpaired. And it was also the first CVA that set the trend where the calculation of landlords' votes for the purpose of passing votes at a CVA creditors meeting were discounted by 75%. Now somebody other than me has worked out that apparently there's been 40 retail led landlord targeted CVAs since JJB. But what I counted up was the run rate for the four years ending in 2017. And the key point was it was pretty minimal, a few a year. That all changed when we got into 2018. And by my calculations, 2018 alone tallied up about 14 CVAs. So we at BL decided that we needed to react to this somewhat changing phenomena, tsunami, however you want to put it. And if you take nothing else out of my five minutes or so, the key message is that BL was not passive in the face of changing times. So what was different about the CVAs that came forward in the 2018 was that they affected more than rent and more than store closures, significant as those are. And what they were doing was altering much more of the other aspects of the fundamental covenant and contract between landlords and tenants. We at BL evolved, if you like, a six pronged strategy to deal with this. So the first thing we did was we got very systematic about getting top notch legal advice as each CVA came forward. We assessed it very quickly because the time period to assess these documents is pretty short and they're voluminous. We assessed where they were attacking various elements of landlord tenant covenant, whether that was appropriate and where they figured against the test for what's legally challengeable or not. Then we got match fit within BL. We put together a steering committee. I represented the legal aspects. We had people from finance, from retail leasing, and you'll hear from Ben Gross in one of the breakouts later on, communications because there was a lot of noise in the press about this new phenomena. And we assessed each and every CVA as it came forward. And we took various things into account. But if we consider that there were opportunistic features of the structure, if we thought they crossed into the line of unfair prejudice for landlords, which is one of the grounds for challenge, then we would vote against in the meeting and we would reserve our right to challenge. So then we decided there wasn't much point in having that kind of strategy if the people promoting these schemes didn't know about it. So we proactively engaged with the insolvency practitioners who are very heavily involved in this market. And we went and met them, and we taught them through our thinking, and we taught them through what we were seeing. And we were very clear. We essentially said, look, if you bring forward CVAs with these kind of profiles, expect us not to be happy about it. So having talked to the insolvency practitioners, and I'm up to three strands of our strategy, the fourth was to engage the wider market. And through the Insolvency Committee, which has representatives from lots of landlords and various practitioners in the insolvency world and is part of the infrastructure of the British Property Federation, we came up with what we call the 10 red flags. And all that great legal advice that we got, we boiled it down to 10 features of CVAs, and we called these the red flags. And we pushed these out, and you can find them on the BPF website. We pushed these out to the market. And the message that we were trying to get across was we thought these crossed the line. We thought that they were features that were unfairly prejudicial to landlords. And essentially, what we were saying is if a CVA is promoted with lots of these features, expect landlords to be pretty unhappy about them. So I'm up to four. There's not a lot of case law in recent years about what's fair in a CVA and what's not. So BL joined together with three other landlords, and we launched a legal challenge against the CVA brought forward by the Reaches business, which is a hairdressing business. A legal challenge is, as you'd expect, active litigation, so I'm not going to get into a great deal of detail. Safe to say that the features of that challenge look at both sides of the grounds that you can legally challenge a CBA. Number one, the practicalities of the process by which it's brought forward. And we think that CVA has features to do with prior structuring and restructuring of the organization that should have been brought out further in the process. And secondly, the CVA has features that we would say are unfairly prejudicial to landlords. So we've had five strands of the strategy. At the back end of last year, we began to work on a sixth, which was to look at how, from a matter of legal technology, a group of landlords could form together and come together to form a steering committee in the context of these very multifaceted large scale restructurings. So it's been very common in the bondholders' market across all sectors forever basically to have steering committees. The technology is not new, but it is new and exciting to landlords. And we worked together with other landlords and legal advisers and a third party adviser to work out how that could be structured. And where we were coming from was, if there's a large scale restructuring and there's a table at which there's a pension trustee and there's bondholders and there are banks and there might well be a single or a majority shareholder, then there should be a seat at that table, early doors in the restructuring for the landlords. And that was our thinking. Because the table tends to be where the restructuring cake is divided. And if you're not at the table, the cake's all gone and you're left with the crumbs. So that was where we were thinking we wanted to move some market practice. And you saw that deployed in Arcadia. And the results of that were that through a third party safe black box, if you like, there was greater access and verification of an underlying business plan than landlords had ever had access to before. And there were concessions gained that benefited the whole landlord community, not just those who were part of the SteerCo. Underlying all of this, like a stick of rock, is continued communication with the customers. And you'll hear that coming through loud and clear today and also in the retail breakout session, continually talking to our customers saying, What's going on with you? Are you in difficulty? Talk to us. Don't spring something like this on us. Let's work with you and talk about it. So this next slide is really busy, and don't worry, I'm not going to take you through it because that would take half an hour. Focus on the colors. Now this is my color scheme, and this is my completely subjective assessment of where some of the features of CBAs have moved in the last year. I've taken the top 10 BPF red flags, and in time honored fashion, I've dialed it up to 11 with my own eleventh. But the point is that if you look at the trends, you'll see that there's some green on there. Now the green are features that we would have seen asked for a year ago and now either aren't asked for at all or with a bit of very light challenge tend to be conceded. I'm not going to sugarcoat this. There's red on there as well. And we still see on each and every CBA a desire on the part of tenants to have maximum flexibility on break rights just in case. We also see an unwillingness to give landlords the same mirrored flexibility, and that tends to be a recurring source of how was it, Chris? But it frank exchange of views when these things come forward. However, trends of very, very recent CVAs are beginning to see some improvement. Now I wouldn't like to give you the impression that this kind of color spectrum of movement towards a more middle ground is where CVAs, as they come forward, start out. It's not. This is where they end up, at the end of a great deal of discussion, negotiation, exchange of views and frankly lots and lots of hard work. Okay. So I spoke briefly about our current operational retail metrics. So I just wanted to share a few thoughts on a longer term view. I mean the key question is where do we go from here? There will be a range of potential outcomes. But for us, two key important factors are going to be affordability and importantly, the potential to get growth in trading densities. Starting with affordability, a lot of focus on this. And you can see from the chart, we've got our occupancy cost ratio and our rent to sales ratio. We're at the competitive end of the market. This is important. It means that the vast majority of our retailers trade profitably at our locations. That's due to the nature of our assets, the trading densities they achieve, but also our tight focus on service charge cost. So we start from a position of relative affordability. So what's the outlook for trading density growth? We thought it'd be useful to share with you the long term framework we use in the business. It's high level, but it hopefully gives you an insight into how we're thinking about the key drivers. So if we look at physical retail sales trajectory, clearly, key drivers of that are going to be what's happening to total sales and the growth rate there and then how much of that is going online. But for us, we focus more on trading density. And these are linked by what's happening to floor space. And we think this is the factor that's going to change most compared to history. For many years in The UK, we added retail space. Over the last two years, this has reversed. We think this will continue. Virtually no new schemes are due to be delivered, and we're all aware of centers closing or being repurposed. So let's look at some numbers. In this framework, we focus on ranges as opposed to a central forecast, given we're looking into the future and the inherent uncertainties there. On the left hand side, we use pessimistic inputs. On the right hand side is more optimistic inputs. So the first element is total sales growth. Over the last ten years, total sales have grown by 3.3%. And you can see there's a range of forecasts there. Interestingly, the lowest we could find was Euromonitor at 2.6 percent. So we're using a range of 2.5% to 4.5%. The next element is online penetration. It's 19% today. Most forecasts are that this will stabilize around 35% or 40%. So using 50% at the pessimistic end seems prudent to us. If you put these together, it gives you a growth rate range for physical sales, minus 2% to plus 2%. Our view is that effectively, online will absorb most of the growth in total sales, And that's certainly what we've seen recently. But as I mentioned, for us, it's really important to look at what's happening to trading densities. And so we need to see what's happening to floor space. Last year in The UK, there were 7,500 store closures. That's a net number, net closures. And JLL are forecasting that over the next seven years, floor space will shrink by 1% per annum. So in terms of the change in floor space, we're using a range of 1% to 2% of shrinkage. And so if you overlay that, that gives a range for industry trading densities of minus one percent to plus 4%. But we've got a long track record, as I showed, of outperforming on like for like sales. Our average outperformance over the last four years is 190 basis points. We think we can continue this going forward because it's driven by our asset management capability and with careful asset selection. So overlaying this gives a range for BL trading density growth of plus 1% to plus 6%. It's a really wide range, granted. But what's important to me is that with relatively pessimistic assumptions, the bottom of that range is positive. So overall, the view is that online will absorb most of total sales growth, but floor space will shrink and the BL portfolio will continue to outperform. So we do expect it to remain tough for the next couple of years, but we do believe our same store sales will grow. And there's clearly value from the store incremental value to retailers from click and collect, return handling and other fulfillment options. And we start from a position of affordability. And so with continued careful asset selection, we believe our portfolio will succeed in the long run. Before we go into breakout, I just wanted to share a couple of data points with you. In the run up to this event, a number of you asked how the retail capital values of our portfolio implied by the share price compared to replacement cost. So we put together the following table. There's clearly going to be a range of views as to how much of the discount relates to retail, how much to offices. What we've done is we've, on the left hand side, assumed the discount applies equally to retail and offices. And on the right hand side, we've put all of the discount onto retail. So this gives you a range for the implied Retail net initial yield of 7% to 12%. And then for Retail capital values that are implied from £310 a square foot to £180 per square foot. To put this in context, our replacement cost in retail is £200 per square foot today. I think this is quite striking in the context of our current operational performance.

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