Landsec ─ Appendices

1

Contents

Page

Page

Sustainability

Financial data and performance

Sustainability leadership

2

Financial history - adjusted diluted earnings per share and dividend per share

23

Our sustainability programme

3-4

Cash flow and adjusted net debt

24

Our portfolio - sustainability performance of our assets

5

Financial history - adjusted diluted net assets per share and Group LTV

25

Five steps we are taking to achieve net zero carbon buildings

6

Expected debt maturities (nominal)

26

Financing

27

Asset performance

The Security Group - summary

28

Top 10 assets by value

7

The Security Group - portfolio concentration limits

29

Valuation movements - year ended March 2020

8

Yield movements - like-for-like portfolio

9

Development and market analysis

Rental and capital value trends - like-for-like portfolio

10

Development programme returns

30

Rental and capital value trends - Office like-for-like portfolio

11

Impact of Covid-19 on development programme

31

Rental and capital value trends - Retail like-for-like portfolio

12

Optionality in the development programme

32

Portfolio performance relative to MSCI

13

Pipeline of office-led development opportunities

33

Analysis of performance relative to MSCI

14

Pipeline of retail re-purposing development opportunities

34

Property/gilt yield spread

35

Rental and lease analysis

Central London investment market

36

Reversionary potential - like-for-like portfolio

15

Central London office market - take-up

37

Combined Portfolio - lease maturities (expiries and break clauses)

16

Central London rolling 12-monthtake-up

38

Central London availability and vacancy rate

39

Retail analysis

Central London secondhand supply vs rental value growth

40

Retail sales, footfall and affordability

17

London Office market availability - Grade A vs. secondhand space

41

Top retail and leisure occupiers by percentage of Group rent

18

Central London supply - grade A completions and vacancy rate

42

Company voluntary arrangements (CVA)

19

Central London supply - grade A pre-let and speculative supply

43

CVA/Administration exposure by occupier

20

Central London office - development completions, vacancy, rental and capital growth

44

CVA/Administration analysis by annualised rental income

21

Voids and units in administration

22

Landsec ─ Appendices

2

Sustainability leadership

Demonstrated by our performance across all key ESG benchmarks

Benchmark

Performance in 2019/20

Benchmark

Performance in 2019/20

GRESB 5 star rated entity, score 90% sector leader, ranking 1stin Europe and UK diversified office/retail (mixed)

A-list (top 2%) for the third year running The only A-list UK REIT

Score 82/percentile ranking 98thEuropean Real Estate leader, ranking 4thglobally

We've again been named a climate leader, ranking 5thfor all FTSE 100 companies and 1stfor our sector

Received our 6thGold Award from EPRA for best practice sustainability reporting

Percentile ranking 89th

We continue to retain our established position in the FTSE4Good Index

ESG rating AA

Score 82/percentile ranking 97th

Landsec ─ Appendices

Our sustainability programme

Ambitious commitments split into three core areas

3

Updated target

Creating jobs and opportunities

Community employment

Create £25m of social value through our community programmes by 2025

Efficient use of natural resources

Carbon

Reduce carbon emissions by 70% by 2030 compared with a 2013/14 baseline, for property under our management for at least two years

Sustainable design and innovation

Resilience

Assess and mitigate physical and financial climate change adaptation risks that are material across our portfolio

Fairness

By 2020, ensure everyone working on our behalf, in an environment we control, is given equal opportunities, protected from discrimination and paid at least the Foundation Living Wage

Diversity

Make measurable improvements to the profile - in terms of gender, ethnicity and disability - of our employee mix

Health, safety and security

Renewables

Ensure 100% of our electricity supplies through our corporate contract are from REGO-backed renewable sources and achieve 3 MW of renewable electricity capacity by 2030

Energy

Reduce energy intensity by 40% by 2030 compared with a 2013/14 baseline, for property under our management for at least two years

Waste

Materials

Source core construction products and materials from ethical and sustainable sources

Biodiversity

Maximise the biodiversity potential of all our development sites and achieve a 25% biodiversity net gain across our five sites with the greatest potential by 2030

Wellbeing

Maintain an exceptional standard of health, safety and security in all the working environments we control

Send zero waste to landfill and at least 75% waste recycled across all our operational activities by 2020

Ensure our buildings are designed and managed to maximise wellbeing and productivity

Landsec ─ Appendices

Our sustainability programme

Delivering significant results across all areas

4

Creating jobs and opportunities

Social Value

Created more than £4.8m of social value through our community programmes, exceeding our in-year target to create £4m

Efficient use of natural resources

Carbon

Increased the level of ambition of our science-based target, as we achieved previous 2030 target 11 years early. In line with our target, we've reduced carbon emissions by 42% since 2013/14

Sustainable design and innovation

Resilience

Continued to align our climate-related disclosures with the TCFD recommendations. Quantitative assessment of transition risks to be undertaken in 2020

Fairness

Continue to pay everyone in our business at least the Real Living Wage. On track to meet our commitment to pay everyone working on our behalf, in an environment we control, the Real Living Wage by the end of 2020

Renewables

Continued to procure 100% renewable electricity across our portfolio through our corporate contract. Our current on site renewable electricity capacity has reached 1.5 MW

Materials

Created a 'red list' for banned materials to guide our supply partners and mitigate human rights risks.

99.9% of key construction materials responsibly sourced

Diversity

Across the whole organisation 52% of our employees are female, exceeding our 2025 target of 50%. In the representation of women at leader level, we increased to 24% this year

Health and safety

Migrated to ISO 45001 and launched a new mandatory health and safety training for all employees. We have invested over £7m rectifying almost 125,000 firestopping defects in our buildings

Energy

Reduced energy intensity by 22% since 2013/14 against our 2030 target

Waste

Continued to divert 100% from landfill and we're recycling 73% of operational waste

Biodiversity

Continue to partner with The Wildlife Trusts to enhance biodiversity net gain at our five operational sites. On track to deliver significant net gain on our developments

Wellbeing

Our commercial office developments are designed to enable customers to achieve the WELL certification for their operations

Landsec ─ Appendices

5

Our portfolio

Sustainability performance of our assets

42% reduction in carbon emissions (tCO2e) compared to 2013/14 baseline

22% reduction in energy intensity (kWh/m2) compared to 2013/14 baseline

£5m avoided energy consumption costs benefitting customers in year

Zero waste sent to landfill with 73% of waste recycled

40% BREEAM certified by portfolio floor area

  • 0.2% - Outstanding
  • 19.3% - Excellent
  • 17.5% - Very Good
  • 2.8% - Good/Pass

59% BREEAM certified by portfolio value

CGI of Nova East, SW1

Landsec ─ Appendices

6

Five steps we are taking to achieve net zero carbon buildings

What

Reducing operational energy use

Investing in renewable energy

Using an internal shadow price of carbon

Reducing construction impacts

Offsetting remaining carbon

How

  1. Usingscience-based operational targets
  2. Designing our developments to ensure performance
  1. Purchasing 100% renewable electricity through our corporate procurement contracts
  2. Increasing our on site renewable generation

1. Factoring carbon risk and cost into decision-making to drive investment towards cleaner options

  1. Measuring the embodied carbon profile of developments to enable design and specification of low carbon choices
  2. Repositioning assets towards lower carbon options

1. Purchasing carbon offsets for the construction impacts of new developments and disclosing quantities

Current status

  1. Approved updatedscience-based target, committing us to a 70% reduction in carbon by 2030; currently at a 42% reduction compared with a 2013/14 baseline Targeting to reduce energy intensity by 40% by 2030; currently at a 22% reduction
  2. Undertaking advanced energy modelling for all our live commercial developments following the BBP (Better Buildings Partnership) initiative
  1. Purchasing 100%REGO-backed renewable electricity since 2016 and investigating feasibility of moving to Power-Purchase Agreements (PPAs) to support additional renewable generation and increase price certainty
  2. Our current on site renewable electricity capacity has reached 1.5 MW

1. Modelling of the internal shadow price of carbon with our investment teams included in Investment Committee papers to prepare the business for a potential future real carbon price

  1. Embodied carbon reduced by over 40% compared to traditional construction by working on alow-carbon steel and engineered timber hybrid structure
    at Lavington Street; Embodied carbon at Sumner Street is 21% lower than developed design baseline
  2. Prioritising the refurbishment of assets, such as Portland House

1. Investigating carbon offsetting projects with carbon offsetting project developer

Landsec ─ Appendices

7

Top 10 assets by value as at 31 March 2020

Name

Ownership

interest

%

New Street Square, EC4

100

Cardinal Place, SW1

100

One New Change, EC4

100

1 & 2 New Ludgate, EC4

100

Gunwharf Quays, Portsmouth

100

Queen Anne's Gate, SW1

100

Nova, SW1

50

21 Moorfields, EC2

100

Bluewater, Kent

30

62 Buckingham Gate, SW1

100

Aggregate value of top 10 assets: £5.7bn (44% of Combined Portfolio)

  1. Landsec share. Rental Income is as reported in the income statement
  2. Development area
  3. Pre-letto Deutsche Bank

Floor

area

Sq ft (000)

Office: 932

Retail: 22

Office: 459

Retail: 57

Office: 349

Retail: 210

Office: 369

Retail: 27

Retail: 552

Office: 354

Office: 480

Retail: 75

Office: 564(2)

Retail: 1,881

Office: 261

Retail: 16

Rental

Let

Weighted

income(1)

by income

average unexpired

lease term

£m

%

Years

52

100

8.6

29

100

4.4

27

100

5.4

20

100

12.6

30

97

4.3

32

100

6.7

18

100

10.4

Development in progress

100(3)

25.0

29

93

5.1

16

100

5.0

Landsec ─ Appendices

8

Valuation movements

Year ended 31 March 2020

Market value

Valuation

Rental value

Net initial

Equivalent

Movement in

31 March 2020

change

change(1)

yield

yield

equivalent yield

£m

%

%

%

%

bps

Office

6,009

1.9

4.6

4.3

4.6

6

London retail

1,307

-15.8

-5.6

4.6

4.6

37

Regional retail

1,494

-27.5

-9.8

6.4

6.2

103

Outlets

871

-10.3

2.3

5.6

5.9

56

Retail parks

444

-25.5

-7.7

7.5

7.4

111

Leisure and hotels

1,153

-10.9

-1.9

4.3

5.8

31

Other

398

1.7

-

3.3

4.4

18

Total like-for-like portfolio

11,676

-8.8

-1.0

4.8

5.1

27

Proposed developments

218

-14.7

n/a

-

n/a

n/a

Development programme

558

3.5

n/a

-

4.3

n/a

Completed developments

169

-28.1

-11.4

6.1

6.0

113

Acquisitions

160

-9.3

n/a

2.2

4.8

n/a

Total Combined Portfolio

12,781

-8.8

-1.2

4.5

5.1

25

Office

6,826

1.1

3.8

London retail

1,370

-15.0

4.6

Regional retail

1,663

-27.6

6.4

Outlets

871

-10.3

5.6

Retail parks

444

-25.5

7.5

Leisure and hotels

1,188

-10.9

4.3

Other

419

1.3

3.3

Total Combined Portfolio

12,781

-8.8

4.5

(1) Rental value change figures exclude units materially altered during the year and other non like-for-like movements

Landsec ─ Appendices

9

Yield movements

Like-for-like portfolio

31 March 2020

31 March 2019

Net initial

Equivalent

Topped-up net

Net initial

Equivalent

yield

yield

initial yield(1)

yield

yield

%

%

%

%

%

Office

4.3

4.6

4.5

3.9

4.5

London retail

4.6

4.6

4.7

4.1

4.3

Regional retail

6.4

6.2

6.7

4.9

5.2

Outlets

5.6

5.9

5.6

5.0

5.4

Retail parks

7.5

7.4

8.0

6.2

6.2

Leisure and hotels

4.3

5.8

4.5

5.2

5.5

Other

3.3

4.4

3.3

3.0

4.2

Total like-for-like portfolio

4.8

5.1

5.0

4.4

4.8

(1) Topped-up net initial yield adjusted to reflect the annualised cash rent that will apply at the expiry of current lease incentives

Landsec ─ Appendices

10

Rental and capital value trends

Like-for-like portfolio

Like-for-like portfolio value at 31 March 2020: £11,676m

Rental value change(1)

Valuation change

OFFICE

RETAIL

SPECIALIST

TOTAL LFL PORTFOLIO

Six months ended 30.09.19

Six months ended 31.03.20

Year ended 31.03.20

%

%

%

1.9

2.7

4.6

0.3

1.6

1.9

-2.3

-3.8

-6.1

-6.1

-14.4

-20.5

-1.1

-0.8

-1.9

-2.2

-5.8

-8.0

-0.4

-0.6

-1.0

-2.7

-6.1

-8.8

(1) Rental value change figures exclude units materially altered during the year and other non like-for-like movements

Landsec ─ Appendices

11

Rental and capital value trends

Office like-for-like portfolio

Office like-for-like portfolio value at 31 March 2020: £6,009m

Rental value change(1)

Valuation change

West End

City

Mid-town

Southwark and other

OFFICE

Six months ended 30.09.19

Six months ended 31.03.20

Year ended 31.03.20

%

%

%

2.4

3.3

5.7

0.5

1.4

1.9

0.8

2.4

3.2

-0.1

2.5

2.4

2.3

2.5

4.8

0.3

1.3

1.6

0.1

-

0.1

0.5

-

0.5

1.9

2.7

4.6

0.3

1.6

1.9

(1) Rental value change figures exclude units materially altered during the year and other non like-for-like movements

Landsec ─ Appendices

12

Rental and capital value trends

Retail like-for-like portfolio

Retail like-for-like portfolio value at 31 March 2020: £4,116m

Rental value change(1)

Valuation change

London retail

Regional retail

Outlets

Retail parks

RETAIL

Six months ended 30.09.19

Six months ended 31.03.20

Year ended 31.03.20

%

%

%

-2.7

-2.9

-5.6

-4.3

-11.5

-15.8

-3.7

-6.1

-9.8

-9.4

-18.1

-27.5

1.0

1.3

2.3

0.6

-10.9

-10.3

-2.0

-5.7

-7.7

-11.1

-14.4

-25.5

-2.3

-3.8

-6.1

-6.1

-14.4

-20.5

(1) Rental value change figures exclude units materially altered during the year and other non like-for-like movements

Landsec ─ Appendices

13

Portfolio performance relative to MSCI

Year ended 31 March 2020

Rental value performance

Ungeared total property return

Landsec(1)

MSCI

Landsec

MSCI

%

%

%

%

OFFICE

4.6

1.2(2)

4.5

3.5(2)

RETAIL

-6.1

-5.9(3)

-17.3

-9.8(3)

SPECIALIST

-1.9

n/a(4)

-3.9

n/a(4)

TOTAL PORTFOLIO

-1.0

-1.0(5)

-4.5

-0.4(5)

  1. Like-for-likeproperties: rental value performance figures exclude units materially altered during the year and other non like-for-like movements
  2. MSCI Central and Inner London Office benchmark
  3. MSCI All Retail benchmark
  4. No benchmark available
  5. MSCI All Property Quarterly Universe

Landsec ─ Appendices

14

Analysis of performance relative to MSCI

Attribution analysis, ungeared total property return, year ended 31 March 2020, relative to MSCI All Property Quarterly Universe

%

1.0

0.0

0.1

-

-

-0.7

-1.0

-2.0

-4.3

-4.1

-3.0

-4.0

0.1

-5.0

Relative income

Capital

Contribution of

Contribution of

Contribution of

Total

Impact of structure

return

growth

developments

purchases

disposals

Source: MSCI

Landsec ─ Appendices

Reversionary potential

Like-for-like portfolio

Net reversionary potential(1)

%

-0.6

March 19

-2.5

0.6

-1.3

1.5

September 19

-3.4

-1.3

-1.0

3.9

March 20

-4.7

-0.8

-0.4

OFFICE

RETAIL

SPECIALIST

TOTAL PORTFOLIO

15

Reversionary potential(1)at 31 March 2020

%

OFFICE(2)

-6.5

10.4

3.9

London retail

-11.1

8.4

-2.7

Regional retail

-17.5

11.3

-6.2

Outlets

-2.8

3.5

0.7

Retail parks

-17.2

5.3

-11.9

RETAIL

-12.9

8.1

-4.7

Leisure and hotels

-8.4

7.4

-0.9

Other

-0.8

0.8

-

TOTAL PORTFOLIO(2)

-9.3

8.9

-0.4

Gross reversionary potential

Over-renting

Net reversionary potential

  1. Excludes voids and rent free periods
  2. As at 31 March 2020, Queen Anne's Gate (QAG), SW1 accounted for 92% of the Officelike-for-likeover-renting. Excluding QAG, the Office segment and Combined Portfolio would be 10.1% and 2.3% net reversionary, respectively

Landsec ─ Appendices

16

Combined Portfolio - lease maturities (expiries and break clauses)

Excluding development programme

As at 31 March 2020

% of portfolio rental income

10.7

11

9.6

10

9

8.5

8

7

6.4

6.7

6

5

4

3

2

1.4

1

0

Holding over / 2020

2021

2022

2023

2024

2025

OFFICE

RETAIL

SPECIALIST

Landsec ─ Appendices

17

Retail sales, footfall and affordability

Same centre sales 408bps ahead of BRC benchmark

Footfall and sales growth/(decline)(1)

Landsec

%

%

%

%

%

12-month relative

11-month relative

12-month(1)

11-month(1)

11-month(1)

12-month

11-month

performance

performance

Footfall

-4.3

-1.2

UK Footfall(2)

-6.5

-3.7

+222bps

+254bps

March YOY

-44.4

Same centre sales(3)

-3.8

0.9

BRC non-foodin-store - total(4)

-6.0

-3.2

+220bps

+408bps

Same centre sales excluding automotive sales

-4.5

0.1

Same store sales(6)

-2.0

-0.9

BRC non-foodin-store - LFL(4)

-6.0

-3.3

+403bps

+238bps

Same store sales excluding automotive sales

-2.9

-1.8

BRC non-food all retail(5)

-3.0

-1.1

Occupancy cost trends

11 months to February 2020

Overall

Excluding anchor stores

Excluding anchor stores and MSUs

Catering only

Rent

Occupancy cost

to physical store sales ratio(7)

to physical store sales(8)

%

%

10.6

20.7

12.8

24.1

12.9

23.7

11.5

21.5

Rent/sq ft

£

41

53

66

50

Source: Landsec, unless specified below, data is exclusive of VAT and for the 48/53 week figures above, based on over 1,500 tenancies where the occupiers provide Landsec with turnover data

  1. 12 month measures refer to 53 weeks to 5th April 2020 vs 53 weeks to 7th April 2019 and 11 month measures refer to 48 weeks to 1st March 2020 vs 48 weeks to 3rd March 2019
  2. ShopperTrakUK national benchmark, ShopperTrakMalls index based on more than 300 UK Malls
  3. Landsec same centre total sales. Based on all store sales and takes into account new stores and new space
  4. BRC-KPMGRetail Sales Monitor (RSM). Based on an average of four quarters non-food retail sales growth for physical i.e. bricks and mortar stores only (does not include online sales)
  1. BRC-KPMGRetail Sales Monitor (RSM). Based on an average of four quarters non-food retail sales growth including online sales
  2. Landsec same store/same tenantlike-for-like sales
  3. Rent as a percentage of total 11 month physical store sales
  4. Total occupancy cost (rent, rates, insurance and service charge) as a percentage of total 11 month physical store sales

Landsec ─ Appendices

18

Top retail and leisure occupiers by percentage of Group rent

Brand

Status

Number

Group

Brand

of units

rent

Cineworld

14

1.6%

Superdrug / Perfume Shop

Boots

21

1.4%

John Lewis Partnership(3)

Sainsbury's

13

1.2%

River Island

H&M

15

1.0%

Debenhams

Next

14

1.0%

VF Corporation

M&S(1)

12

0.9%

JC Decaux

The Restaurant Group(2)

45

0.9%

Odeon

Tesco

9

0.8%

Victoria's Secret

Vue

6

0.8%

Signet Group

Primark

5

0.7%

Aurum Holdings

Dixons Carphone

20

0.7%

Barclays Bank

Gap

12

0.6%

Frasers Group(4)

Arcadia

CVA

11

0.6%

Clarks

Nando's

29

0.5%

Superdry

New Look

CVA

9

0.5%

TX Maxx / Homesense

  1. Includes M&S Simply Food Store
  2. Includes Chiquitos who are in administration
  3. Includes Waitrose & Partners Stores
  4. Includes Sports Direct and brands acquired out of administration, House of Fraser, Evans Cycles and Jack Wills

Status

Administration

Number

of units

22

7

8

5

18

19

6

6

17

14

4

14

12

7

6

Group

rent

0.4%

0.4%

0.4%

0.4%

0.4%

0.3%

0.3%

0.3%

0.3%

0.3%

0.3%

0.3%

0.3%

0.3%

0.3%

Landsec ─ Appendices

Company voluntary arrangements (CVA)

Voting rights

Creditors are entitled to vote for the full amount of their outstanding debt as at the date of the creditors meeting.

A landlord's claim will comprise of amounts due for:

  • Arrears of rent, service charges and insurance - admitted at 100% of the outstanding value
  • Future rent, service charge and insurance up to the earlier of the first lease break or contractual end of the lease; and
  • An amount in respect of dilapidations
  • As the future occupational costs and dilapidations are an unliquidated claim and cannot be substantiated by the chairman of the creditors meeting, to enable them to be admitted for a "meaningful" vote these are generally subject to a 75% discount

19

Landlord lease categories

The company proposing the CVA will employ a property agent to assist it in grouping the leases into different categories which form the basis of the varying degrees of rental compromises across its leasehold portfolio.

A typical CVA will have four categories, these being the following:

  • Category 1 - The most profitable stores (and their core portfolio) which require no rental reduction
  • Category 2 - Marginal stores that only require a small rental reduction (normally 25% of current passing rent) for them to return to profit
  • Category 3 - Stores that with a larger reduction in rent (normally 50% of current passing rent) will return to profitability
  • Category 4 - Stores that even with a large rent reduction will not return to profitability and therefore will close

Following the end of the compromise period those leases that have been subject to a rental reduction under the terms of the CVA will have their annual rent reset to the higher of the compromise rent or the market rent at that time.

Landsec ─ Appendices

20

CVA/Administration exposure by occupier as at 31 March 2020

Brand

Status

Arcadia

CVA

New Look

CVA

Debenhams

CVA(1)

Clintons

Administration

Monsoon Accessorize

CVA

Carpetright

CVA

Jack Wills

Administration

Homebase

CVA

House of Fraser

Administration

Paperchase

CVA

Select

CVA

Carluccio's

Administration

Number of

Group

units

rent

trading(2)

11

0.6%

9

0.5%

4

0.4%

5

0.2%

11

0.1%

4

0.1%

5

0.1%

1

0.1%

1

<0.1%

7

<0.1%

4

<0.1%

4

<0.1%

Brand

Status

Prezzo

CVA

Giraffe

CVA

Regis

Administration

Gourmet Burger Kitchen

CVA

Byron Hamburgers

CVA

Khaadi

Administration

Patisserie Valerie

Administration

LK Bennett

Administration

Others

CVA/Administration

Units trading(2)in

CVA/Administration

Number of

Group

units

rent

trading(2)

7

<0.1%

5

<0.1%

7

<0.1%

5

<0.1%

3

<0.1%

1

<0.1%

3

<0.1%

2

<0.1%

38

0.4%

137

3.3%

  1. Debenhams entered administration in April 2020
  2. Units still trading before temporary closure ofnon-essential retail due to Covid-19

Landsec ─ Appendices

21

Summary of retail and leisure units in CVA/Administration

Analysis by annualised rental income

2019/20 2018/19 2017/18

Administrations

CVAs

Administrations

CVAs

Administrations

CVAs

TOTAL

CVAs and Administrations

from 01.04.17 to 31.03.20

As at 31.03.20

Net change

Reduction

in annualised

Annualised rental

in annualised

Annualised

rental income

income entering

rental income

rental income

% of

Future reduction

Lettings

after re-lettings

CVA or

recognised

in CVA or

Group

in annualised

agreed as at

and future

Administration

Units

to date(1)

Administration

Units

rent

rental income

31.03.20(2)

reductions

£m

£m

£m

£m

£m

£m

2.1

13

(2.1)

-

-

-

-

1.3

(0.7)

5.7

32

(0.9)

4.8

26

0.7%

(0.1)

0.1

(0.9)

5.3

55

(3.5)

1.8

20

0.3%

(0.4)

1.8

(2.1)

4.1

30

(1.8)

2.3

24

0.4%

-

0.2

(1.5)

7.8

57

(3.0)

4.8

31

0.7%

(1.5)

1.4

(3.2)

11.5

37

(3.8)

7.7

36

1.2%

-

0.5

(3.3)

36.5

224

(15.1)

21.4

137

3.3%

(2.0)

5.3(3)

(11.7)

Still trading(4):

137

  1. Relates to impact of CVA/Administration. Ignoresre-letting of vacated units
  2. Lettings agreed as at 31.03.20 are lettings that have exchanged. Prior periods have been restated to reflect subsequent asset disposals and where tenants in CVA have entered administration
  3. £3.9m already recognised within Group annualised rental income as at 31.03.20 (before impact ofCovid-19)
  4. Units still trading before temporary closure ofnon-essential retail due to Covid-19

Landsec ─ Appendices

22

Voids and units in administration

Like-for-like portfolio

%

6

5

4

3

2

1

0

%

6

5

4

3

2

1

0

Voids

31 Mar 2019

5.2

4.5

31 Mar 2020

4.3

4.1

4.0

3.9

3.0

3.1

3.3

2.4

2.4

2.3

1.5

1.0

1.3

1.2

OFFICE

London retail

Regional retail

Outlets

Retail parks

RETAIL

SPECIALIST

TOTAL

PORTFOLIO

Units in administration

31 Mar 2019

31 Mar 2020

3.4

2.8

2.0

1.9

-

-

0.1 0.3

1.1

0.8

0.3

0.9

0.2 0.1

0.4

0.8

OFFICE

London retail

Regional retail

Outlets

Retail parks

RETAIL

SPECIALIST

TOTAL

PORTFOLIO

Like-for-like occupancy in the portfolio was 97.7% at 31 March 2020, 98.1% at 31 March 2019

Landsec ─ Appendices

Financial history

Adjusted diluted earnings per share and dividend per share

Pence 60.0

50.0

45.7

48.3

40.0

40.5

41.5

30.0

34.1

28.0

36.3

28.2

38.5

29.0

36.8

29.8

30.7

31.9

35.0

38.6

20.0

Mar 2010

Mar 2011

Mar 2012

Mar 2013

Mar 2014

Mar 2015

Mar 2016

Mar 2017

Adjusted diluted EPS

Dividend per share

23

59.7 55.9

53.1

44.2

45.6

23.2

Mar 2018

Mar 2019

Mar 2020

Landsec ─ Appendices

24

Cash flow and adjusted net debt(1)

£m

(3,737)

(3,926)

(342)

452

(217)

(36)

65

(59)

(16)

(36)

Opening adjusted

Net cash

Dividends

Development/

Settlement

Acquisitions

Disposals

Premium on

Other

Adjusted

net debt

generated from

paid

other capital

of redemption

redemption

net debt at

31 March 2019

operations

expenditure

liability

of MTNs

31 March 2020

(1) On a proportionate basis

Landsec ─ Appendices

25

Financial history

Adjusted diluted net assets per share and Group LTV

Pence

%

1,550

45

1,400

1,367

1,434

1,408

1,417

1,432

1,422

1,411

1,250

1,293

1,348

1,306

40

1,100

1,129

1,192

950

1,013

35

937

800

826

863

863

864

903

30

737

650

691

500

25

350

200

Mar

Sept

Mar

Sept

Mar

Sept

Mar

Sept

Mar

Sept

Mar

Sept

Mar

Sept

Mar

Sept

Mar

Sept

Mar

Sept

Mar

20

2010

2010

2011

2011

2012

2012

2013

2013

2014

2014

2015

2015

2016

2016

2017

2017

2018

2018

2019

2019

2020

Adjusted diluted net assets per share (LHS)(1)

Group LTV (RHS)(2)

  1. March 2018 onwards represents EPRA net tangible assets
  2. On a proportionate basis

Landsec ─ Appendices

26

Expected debt maturities (nominal)

Year(s) ending 31 March

£m 3,000

2,500

2,000

1,500

1,000

500

0

693

1,897

1,000

810

427

78

131

47

2021

2022

2023

2024

2025-29

2030-34

2035+

Undrawn bank facilities

Drawn bank debt

Bond debt

Landsec ─ Appendices

27

Financing

Significant headroom and a favourable debt structure

  • Security Group has a tiered covenant structure. We can borrow with limited operating restrictions up to 65% LTV and whilst ICR is greater than 1.45x
  • To allow for a shock to either metric, we can continue to borrow up to 80% LTV (if ICR remains above 1.45x) and we can continue to borrow whilst ICR is greater than 1.2x (if LTV remains below 65%)
  • Using March 2020 valuation numbers, we can withstand a valuation fall of 59% or a Security Group EDITDA reduction of £430m before our LTV or ICR covenants prevent further bank drawings

Tiered covenant

LTV %

ICR X

Tier 1

≤55

≥1.85

Tier 2

56-65

≥1.45

Initial Tier 3

66-80

≥1.2

Operating environment - key points

Few operational restrictions

Liquidity facility required for senior interest payments

Debt to be amortised

Property manager appointed to make property recommendations below ICR 1.25x

Final Tier 3

>80

≥1.0

Property manager recommendations to be followed in all material respects

Administrative receiver could be appointed purely to sell assets (>85% LTV)

Default

>100

<1.0

Default which allows the secured creditors to instruct the Trustee to enforce security

and if appropriate accelerate

Landsec ─ Appendices

28

The Security Group

Summary

Our Security Group funding arrangements provide flexibility to buy and sell assets, develop a significant pipeline and raise debt via a wide range of sources. This is subject to covenant tiering which progressively increases operational restrictions in response to higher gearing levels or lower interest cover.

Covenant tiering

Valuation

Incremental

Operating

Key

tolerance

debt from current

from current

position

Tier

restrictions

position

£bn

Tier 1

Minimal

Current

Current

restrictions

Tier 2

Additional liquidity

-41%

+2.7

facilities

Initial

Payment restrictions

-50%

+4.0

Tier 3

Debt amortisation

Final

Disposals to pay

-59%

+5.8

Tier 3

down debt

Potential appointment of

property manager

Control framework

  • There are covenants to protect security effectiveness, limit portfolio concentration risk and control churn of the portfolio
  • The structure, which is overseen by a Trustee, is designed
    to flex with the business and broadly the covenants can be altered in three ways(1):
    • Trustee discretion - if the change is not materially prejudicial to the interests of the most senior class of debt holders
    • Rating affirmation - that the change will not lead to a credit rating downgrade
    • Lender consent
  • An example of how sector and regional concentration limits have changed to reflect the shape of the business is shown on the next slide

(1) Please refer to our most recent Base Prospectus (which is on our website) for full details of the Security Group's terms and conditions

Landsec ─ Appendices

29

The Security Group

Portfolio concentration limits

30 September 2012

31 March 2020

Sector concentration

£bn

%

(% of collateral value)

Office

3.9

44

Shopping centres and shops

3.0

33

Retail warehouses

1.1

13

Industrial

-

1

Residential

0.1

1

Leisure and hotels

-

-

Other

0.8

8

Regional concentration

£bn

%

(% of collateral value)

London

5.5

62

Rest of South East and Eastern

1.0

11

Midlands

0.2

3

North

1.2

13

Wales and South West

0.5

5

Scotland and Northern Ireland

0.5

6

Non-UK

-

-

Maximum permitted

Sector concentration

£bn

%

Maximum permitted

Acquisition headroom

%

(% of collateral value)

%

£bn

60

Office

6.4

52

85

26

60

Shopping centres and shops

4.2

35

100

n/a

55

Retail warehouses

0.4

4

55

14

35

Industrial

-

-

20

3

35

Residential

-

-

20

3

-

Leisure and hotels

1.1

9

25

3

15

Other

-

-

15

2

Maximum permitted

Regional concentration

£bn

%

Maximum permitted

Acquisition headroom

%

(% of collateral value)

%

£bn

75

London

8.5

70

100

n/a

40

Rest of South East and Eastern

1.8

15

70

22

40

Midlands

0.1

1

40

8

40

North

1.0

8

40

6

40

Wales and South West

0.4

3

40

7

40

Scotland and Northern Ireland

0.3

3

40

8

5

Non-UK

-

-

5

1

Portfolio concentration limits have been amended over time to reflect the changing shape of the business.

Landsec ─ Appendices

30

Development programme returns

21 Moorfields, EC2

105 Sumner Street, SE1

Nova East, SW1(1)

Lucent, W1

Status

Fully committed; pre-let

Building to grade; speculative;

Building to grade; speculative;

Building to grade; speculative;

option to pause

option to pause

option to pause

Pre-Covid-19 estimated completion date(2)

March 2022

March 2022

July 2022

October 2022

Indicative impact of Covid-19 on completion date

+1-2 months(3)

+1-2 months(4)

+1-2 months(4)

+1-2 months(4)

Description of use

Office - 100%

Office - 100%

Office - 100%

Office - 77%

Retail - 21%

Residential - 2%

Landsec ownership

%

100

100

50

100

Size

Sq ft (000)

564

140

166

144

Letting status

%

100

-

-

-

Market value

£m

421

40

13

83

Net income/ERV

£m

38

10

6

14

Total development cost (TDC) to date

£m

285

36

16

100

Forecast TDC(1)

£m

576

140

101

239

Gross yield on cost(5)

%

6.5

6.8

6.4

5.8

Valuation surplus/(deficit) to date

£m

132

4

(3)

(16)

Market value + outstanding TDC

£m

712

144

98

223

Gross yield on market value +

%

5.3

6.6

6.6

6.2

outstanding TDC(2)

  1. All £m figures are at Landsec's 50% share for Nova East, SW1
  2. Before the impact ofCovid-19 on programme and assuming full commitment
  3. The full impact ofCovid-19 on 21 Moorfields, EC2's practical completion will be dictated by productivity which is currently around 50% but improving
  4. Assuming we do not exercise option to pause
  5. Based on ERV to the nearest £0.1m

Landsec ─ Appendices

31

Impact of Covid-19 on development programme

All speculative schemes already had optionality as we built to grade

Work is continuing but we are maintaining that optionality for at least six months

Current status

Next steps

Covid-19 response

Indicative impact on completion date

Total development cost to date

Unspent contractual commitment

New commitments made since March 2020

TDC not yet contractually committed

Future capitalised interest cost

Forecast total development cost

Next 12 months' cash flow (approx.)

21 Moorfields, EC2

Progressing; construction contract

in-place

Continue construction of superstructure

Construction continues with reduced workforce on site

+1-2 months(2)

£m

285

273

n/a

n/a

18

576

139

105 Sumner Street, SE1

On site building to grade

Continue subterranean works

Construction management

approach has added flexibility:

tendering long lead time packages

+1-2 months(3)

£m

36

7

15

79

3

140

47(2)

Nova East, SW1(1)

On site building to grade

Complete subterranean works and negotiate main construction contract

Negotiating break points to the contract to give flexibility to pause

+1-2 months(3)

£m

16

5

10

68

2

101

18(2)

Lucent, W1

On site building to grade

Enter main construction contract

Break points included in contract

to give flexibility to pause

+1-2 months(3)

£m

100

21

8

104

6

239

26(2)

  1. All £m figures are at Landsec's 50% share for Nova East, SW1
  2. The full impact ofCovid-19 on 21 Moorfields, EC2's practical completion will be dictated by productivity which is currently around 50% but improving
  3. Assuming we do not exercise option to pause

Landsec ─ Appendices

32

Optionality in the development programme

We continue to progress while deferring full commitments for at least six months

  • 21 Moorfields the only fully committed scheme
  • The remaining three schemes already had optionality as we built to grade; we are now building further break points into our construction plans while continuing to progress design/ground works
  • Expected capex for 2020/21 £230m(1)out of total unspent on programme of £590m

Unspent contractual

New commitments

Total

Commitment

Remaining unspent

12-month

commitment at

made since

commitment

deferred until future

development

cash flow(1)

31 March(2)

31 March(2)

to date

break points(2)

expenditure(2)

(approximate)

Fully committed:

£m

£m

£m

£m

£m

21 Moorfields, EC2

273

-

273

n/a

273

139

Building to grade:

105 Sumner Street, SE1

7

15

22

79

101

47

Nova East, SW1 (50%)

5

10

15

68

83

18

Lucent, W1

21

8

29

104

133

26

Total on site

306

33

339

251

590

230

  1. Assuming we do not exercise our option to stop and that there are no further delays on site
  2. Excludes future capitalised finance cost

Landsec ─ Appendices

33

Pipeline of office-led development opportunities

Potential to bring another 1.0m sq ft of office-led schemes to market within 4½ years, with a total development cost of c.£1.1bn

Portland House, SW1

Lavington Street, SE1

Red Lion Court, SE1

Status

Planning consent granted

Planning application submitted

Progressing design

Earliest start date

August 2020

October 2020

October 2021

Pre-Covid-19 estimated completion date

February 2023

October 2023

September 2024

Indicative impact of Covid-19 on completion date

5-7 months delay as commitment deferred

No significant delay expected

No significant delay expected

Description of use

Office - 90%

Office - 96%

Office - 96%

Retail - 10%

Retail - 4%

Retail - 3%

Landsec ownership

%

100

100

100

Current annualised rental income

£m

-

-

4

Current size

Sq ft (000)

310

141

128

Proposed size

Sq ft (000)

400

378

237

£m

£m

Market value at 31 March 2020

209

85

Indicative future development expenditure

233

281

Indicative future capitalised interest cost

9

14

Indicative total development cost

450

380

Landsec ─ Appendices

34

Pipeline of retail re-purposing development opportunities

Masterplanning continues at four London sites for c.£3.5bn of mixed use developments including c.7,000 homes

Exploring re-purposing in regional cities

Shepherd's Bush, W12

Finchley Road, NW3

The Lewisham Centre

Southside, Wandsworth

One Dundas Square, Glasgow

Buchanan Galleries, Glasgow

Status

Stage 2 design underway

Masterplanning under way

under a newly expanded scope

Site assembly and

masterplanning under way

Masterplanning under way

Planning submitted for 120,000 sq ft office opportunity adjacent to Buchanan Galleries

Masterplanning wider residential and office opportunity

Landsec

ownership

%

100

100

100

50

100

100

Current use

Retail & Leisure

Sq ft (000)

302

310

330

600

n/a

592

Indicative use

Office

Retail & Leisure

Homes

Sq ft (000)

Sq ft (000)

650

150

80

2,000

50

100

2,250

190

100

2,000

-

400

-

110

10

350

100

330

Earliest

Earliest completion

start

on site

Phase 1

Masterplan

2023

2025

2031

2023 2027 2034

2023 2027 2038

2024 2027 2036

2021 n/a 2023

2023 n/a 2028

Property All Index Monthly MSCI Bloomberg, Source:

Mar 89

Sep 89

Mar 90

Sep 90

Mar 91

Sep 91

Mar 92

Sep 92

Mar 93

Sep 93

Mar 94

Sep 94

Mar 95

Sep 95

Mar 96

Sep 96

Mar 97

Sep 97

Mar 98

Sep 98

Mar 99

Sep 99

Mar 00

Sep 00

Mar 01

Sep 01

Mar 02

Sep 02

Mar 03

Sep 03

Mar 04

Sep 04

Mar 05

Sep 05

Mar 06

Sep 06

Mar 07

Sep 07

Mar 08

Sep 08

Mar 09

Sep 09

Mar 10

Sep 10

Mar 11

Sep 11

Mar 12

Sep 12

Mar 13

Sep 13

Mar 14

Sep 14

Mar 15

Sep 15

Mar 16

Sep 16

Mar 17

Sep 17

Mar 18

Sep 18

Mar 19

Sep 19

Mar 20

6-

4-

2-

0

2

4

6

8

10

12

% 14

Spread

EY Property

gilt year-10

Property/gilt

Appendices ─ Landsec

spread yield

35

Landsec ─ Appendices

36

Central London investment market

2019 transaction levels were down 36% on 2018 with Q1 2020 levels the lowest seen since Q1 2010

Investment volumes

Office capital inflow by region

£bn 25

20

15

Q4

10

Q3

5

Q2

Q1

0

1987

1991

1995

1999

2003

2007

2011

2015

2019

Source: CBRE; shows calendar years

UK

Rest of Europe

Asia

Germany

Middle East / North Africa

US / Canada

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

1984- 1990- 2000-

2010-

2013- 2016 2017 2018 2019

Q1

1989

99

09

12

15

2020

Landsec ─ Appendices

37

Central London office market - take-up

A decade of rental growth and seven years of stable take-up

m sq ft

131.5%

99.3%

39.8%

65.1%

rental growth

rental growth

rental growth

rental growth

(18.3% CAGR)

(9.0% CAGR)

(8.7% CAGR)

(5.1% CAGR)

24

-55.9%

-25.1%

-25.0%

rental decline

rental decline

rental decline

22

(-18.5% CAGR)

(-13.4% CAGR)

(-13.4% CAGR)

20

18

16

14

12

10

8

6

4

2

0

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Take-up (all grades)

10-year average take-up

Source: CBRE, MSCI Annual Index ; shows calendar years

Landsec ─ Appendices

38

Central London rolling 12-monthtake-up

Rolling annual take-up reached 12.7m sq ft as of Q1 2020; marginally below the long-term average for the first time since mid 2017

m sq ft 16

14

12

10

8

6

4

2

0

2008 Q1

2008 Q2

2008 Q3

2008 Q4

2009 Q1

2009 Q2

2009 Q3

2009 Q4

2010 Q1

2010 Q2

2010 Q3

2010 Q4

2011 Q1

2011 Q2

2011 Q3

2011 Q4

2012 Q1

2012 Q2

2012 Q3

2012 Q4

2013 Q1

2013 Q2

2013 Q3

2013 Q4

2014 Q1

2014 Q2

2014 Q3

2014 Q4

2015 Q1

2015 Q2

2015 Q3

2015 Q4

2016 Q1

2016 Q2

2016 Q3

2016 Q4

2017 Q1

2017 Q2

2017 Q3

2017 Q4

2018 Q1

2018 Q2

2018 Q3

2018 Q4

2019 Q1

2019 Q2

2019 Q3

2019 Q4

2020 Q1

Secondhand

New completed

Pre-let

Serviced office

10-year average

Source: CBRE

Landsec ─ Appendices

39

Central London availability and vacancy rate

Availability increased by c.11% in Q1, the first rise since 2018, and the vacancy rate was up to 4.5% (compared to the long-term average of 4.1%)

m sq ft

%

35

16

30

14

25

12

20

10

8

15

6

10

4.5%

4

5

2

0

0

Q1 1991

Q3 1991

Q1 1992

Q3 1992

Q1 1993

Q3 1993

Q1 1994

Q3 1994

Q1 1995

Q3 1995

Q1 1996

Q3 1996

Q1 1997

Q3 1997

Q1 1998

Q3 1998

Q1 1999

Q3 1999

Q1 2000

Q3 2000

Q1 2001

Q3 2001

Q1 2002

Q3 2002

Q1 2003

Q3 2003

Q1 2004

Q3 2004

Q1 2005

Q3 2005

Q1 2006

Q3 2006

Q1 2007

Q3 2007

Q1 2008

Q3 2008

Q1 2009

Q3 2009

Q1 2010

Q3 2010

Q1 2011

Q3 2011

Q1 2012

Q3 2012

Q1 2013

Q3 2013

Q1 2014

Q3 2014

Q1 2015

Q3 2015

Q1 2016

Q3 2016

Q1 2017

Q3 2017

Q1 2018

Q3 2018

Q1 2019

Q3 2019

Q1 2020

Availability

Rolling annual total take-up excl. pre-let

Vacancy rate (RHS)

Source: CBRE, MSCI Monthly Index

  1. Availability represents the total net lettable floor space in existing properties, which is being actively marketed, either for lease, sublease, and assignment or for sale for owner occupation as at the end of the survey period. Availability includes space that is being marketed and is physically vacant or occupied. Space that is physically vacant, but not being marketed or is not available for occupation is excluded from availability.
    Space that is Under Construction and will become ready to occupy within 12 months is included within availability.

Landsec ─ Appendices

40

Central London secondhand supply vs rental value growth

The increase in availability was largely driven by a rise in smaller secondhand units but rental growth remained broadly stable

m sq ft

Rental value growth %

20

30

18

20

16

14

10

12

0

10

8

-10

6

-20

4

-30

2

0

-40

Q1 1991

Q3 1991

Q1 1992

Q3 1992

Q1 1993

Q3 1993

Q1 1994

Q3 1994

Q1 1995

Q3 1995

Q1 1996

Q3 1996

Q1 1997

Q3 1997

Q1 1998

Q3 1998

Q1 1999

Q3 1999

Q1 2000

Q3 2000

Q1 2001

Q3 2001

Q1 2002

Q3 2002

Q1 2003

Q3 2003

Q1 2004

Q3 2004

Q1 2005

Q3 2005

Q1 2006

Q3 2006

Q1 2007

Q3 2007

Q1 2008

Q3 2008

Q1 2009

Q3 2009

Q1 2010

Q3 2010

Q1 2011

Q3 2011

Q1 2012

Q3 2012

Q1 2013

Q3 2013

Q1 2014

Q3 2014

Q1 2015

Q3 2015

Q1 2016

Q3 2016

Q1 2017

Q3 2017

Q1 2018

Q3 2018

Q1 2019

Q3 2019

Q1 2020

Availability - Secondhand space

MSCI Central London rental value growth (12m to quarter)

Source: CBRE, MSCI Monthly Index

  1. Secondhand space is space which is being marketed having been previously occupied in its current state. Current state can include a minorre-decoration, but not a comprehensive refurbishment.
  2. Availability represents the total net lettable floor space in existing properties, which is being actively marketed, either for lease, sublease, and assignment or for sale for owner occupation as at the end of the survey period. Availability includes space that is being marketed and is physically vacant or occupied. Space that is physically vacant, but not being marketed or is not available for occupation is excluded from availability.
    Space that is Under Construction and will become ready to occupy within 12 months is included within availability

Landsec ─ Appendices

41

London Office market availability - Grade A vs. secondhand space

The majority of availability in London is secondhand space with the proportions between prime and secondary continuing to diverge, indicating a bifurcation of the market

Proportion of total 80%

72%

70%

60%

50%

50%

40%

30%

28%

20%

10%

0%

Q2 2008

Q3 2008

Q4 2008

Q1 2009

Q2 2009

Q3 2009

Q4 2009

Q1 2010

Q2 2010

Q3 2010

Q4 2010

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

Q3 2012

Q4 2012

Q1 2013

Q2 2013

Q3 2013

Q4 2013

Q1 2014

Q2 2014

Q3 2014

Q4 2014

Q1 2015

Q2 2015

Q3 2015

Q4 2015

Q1 2016

Q2 2016

Q3 2016

Q4 2016

Q1 2017

Q2 2017

Q3 2017

Q4 2017

Q1 2018

Q2 2018

Q3 2018

Q4 2018

Q1 2019

Q2 2019

Q3 2019

Q4 2019

Q1 2020

Share of secondhand space

Share of

Grade A space

Source: CBRE

(1) Grade A space here is defined as newly-completed space and space that is under construction and will become ready to occupy within 12 months.

Landsec ─ Appendices

42

Central London supply as at 31 March 2020

13.5m sq ft currently under construction and a further 15m sq ft could complete by 2024

m sq ft

Vacancy rate %

18

16

16

14

14

12

12

10

10

8

8

6

4.5%

6

4

4

2

2

0

0

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

Completed

Under construction

Definite/likely

Average completions (1984-2019)

(RHS) Vacancy rate (all grades)

Source: CBRE, Knight Frank, Landsec; shows calendar years

  1. Completions/under construction includes fringe (White City,Non-Core Docklands, Stratford, Nine Elms, Hammersmith). Vacancy rate as at March 2020. From 2017, supply pipeline monitors schemes above 20,000 sq ft
  2. Landsec estimated future supply based on data from CBRE and Knight Frank. However, to reflect theCOVD-19 impact, Landsec have applied a 3-month delay to all schemes (under construction or definite/likely)
  3. "Definite/likely" are proposed schemes where it is reasonable to expect delivery in that year based on, inter alia: planning,pre-let, funding, vacant possession, demolition, construction contract
  4. Grade A space is brand new or comprehensively refurbished space, with high specification and prominent market image
  5. Vacancy rate is expressed as vacant space as a percentage of total stock
  6. Total Stock represents the total completed space (occupied and vacant) in the private and public sector recorded as the net lettable area

Landsec ─ Appendices

43

Central London supply as at 31 March 2020

45% of space under construction is already pre-let as flight to quality continues

Under Construction pipeline split into pre-let and speculative

Covid-19 has caused material uncertainty around the shape of the pipeline with further delays possible along with a potential reduction in construction starts

Speculative pipeline only

m sq ft

Vacancy rate %

m sq ft

Vacancy rate %

12

10

12

10

10

8

10

8

8

c.45%of space

8

Material uncertainty over

under construction is pre-let

future construction starts

6

4.5%

6

6

4.5%

6

4

4

4

4

2

2

2

2

0

0

0

0

2017

2018

2019

2020

2021

2022

2023

2024

2017

2018

2019

2020

2021

2022

2023

2024

Completed

U/C pre-let

U/C speculative

Definite/likely

Average speculative completions

Average completions

(RHS) Vacancy rate

Source: CBRE, Knight Frank, Landsec; shows calendar years

(2010-2019)

(1984-2019)

(all grades)

  1. Completions/under construction includes fringe (White City,Non-Core Docklands, Stratford, Nine Elms, Hammersmith). Vacancy rate as at March 2020. From 2017, supply pipeline monitors schemes above 20,000 sq ft
  2. Landsec estimated future supply based on data from CBRE and Knight Frank. However, to reflect theCOVD-19 impact, Landsec have applied a 3-month delay to all schemes (under construction or definite/likely)
  3. "Definite/likely" are proposed schemes where it is reasonable to expect delivery in that year based on, inter alia: planning,pre-let, funding, vacant possession, demolition, construction contract
  4. Grade A space is brand new or comprehensively refurbished space, with high specification and prominent market image
  5. Vacancy rate is expressed as vacant space as a percentage of total stock
  6. Total Stock represents the total completed space (occupied and vacant) in the private and public sector recorded as the net lettable area.

Landsec ─ Appendices

44

Central London office market

Development completions, vacancy and rental and capital growth

m sq ft

-55.9% rental growth

-25.1% rental growth

-25.0% rental growth

%

18

(-18.5% CAGR)

(-13.4% CAGR)

(-13.4% CAGR)

36

16

32

14

28

12

24

10

20

8

16

6

12

4

8

2

4

0

0

-2

-4

-4

-8

-6

-12

-8

-16

-10

-20

-12

-24

-14

131.5% rental growth

99.3% rental growth

39.8% rental growth

65.1% rental growth

-28

-16

-32

(18.3% CAGR)

(9.0% CAGR)

(8.7% CAGR)

(5.1% CAGR)

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

Development completions

Forecast(1)

Capital value growth (RHS)

Rental value growth (RHS)

Vacancy rate (RHS)

Source: CBRE, Knight Frank, MSCI Annual Index, Landsec; shows calendar years

(1) Landsec forecast based on data from CBRE and Knight Frank

Landsec ─ Appendices

45

Important notice

This presentation may contain certain 'forward-looking' statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Actual outcomes and results may differ materially from any outcomes or results expressed or implied by such forward-looking statements.

Any forward-looking statements made by or on behalf of Landsec speak only as of the date they are made and no representation or warranty is given in relation to them, including as to their completeness or accuracy or the basis on which they were prepared.

Landsec does not undertake to update forward-looking statements to reflect any changes in Landsec's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.

Information contained in this presentation relating to Landsec or its share price, or the yield on its shares, should not be relied upon as an indicator of future performance.

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Land Securities Group plc published this content on 11 May 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 May 2020 07:44:06 UTC