2024-05-24 19:10:04 ET
British Land Company PLC (BTLCY)
Q4 2024 Earnings Conference Call
May 22, 2023 03:30 AM ET
Company Participants
Simon Carter - CEO
Bhavesh Mistry - CFO
Darren Richards - Head of Real Estate
Conference Call Participants
Ben Richford - Bernstein
Rob Jones - BNP Paribas
Sam Knott - Kolytics
Zachary Gauge - UBS
Tom Musson - Goldman Sachs
Marc Mozzi - Bank of America
Adam Shapton - Green Street
Presentation
Simon Carter
Thank you very much for joining us for our Full Year Results. It's been quite a busy year for the business, you have probably noticed, particularly in the last couple of months, so we've got plenty to cover. What I do hope you'll get from these results is a real sense of the momentum in the business and that the strategic decisions we took three years ago are really delivering for us. We're going to follow the normal running order. So Bhavesh will start with the financials, Darren will cover the operational performance, and I'll come back on the strategy and the outlook.
But I thought before we do that, maybe if I just go through the headlines. We're pleased with our operational performance this year. We've continued to lease well across the business with 3.3 million square feet, leasing 15% ahead of ERV. We have also controlled costs well and taken together, this has led to profit growth of 2%, despite a number of properties entering development and the Meta surrender. Our strategy of focusing on Campuses, Retail Parks, and London Urban Logistics is delivering. ERV growth accelerated to nearly 6%, exceeding our guidance in all our sectors. We did see further outward yield shift of 33 basis points in the year, but the pace slowed in the second half. And combined with good rental growth, this meant second half values were stable.
Overall, we outperformed the MSCI total return benchmark by 300 basis points. We've actively recycled capital this year. The highlights include the surrender and joint venture of 1 Triton Square, the sale of our remaining interest in Meadowhall and the commitment and pre-let to 2 Finsbury Avenue. With very good leasing momentum and high occupancy, our base case forecast for rental growth this year is 3% to 5% across each of our markets. Combined with a net equivalent yield of more than 6% and development upside, this provides for an attractive future return profile, which represents an excellent point to hand over to Bhavesh.
Bhavesh, over to you.
Bhavesh Mistry
Thank you, Simon, and good morning, everyone. We've delivered GBP268 million of underlying profit, representing 2% growth despite a number of properties entering development and the Meta surrender. Earnings per share was up by 1% at 28.5 pence. In line with our earnings growth, we'll pay a final dividend of 10.64 pence per share, taking the full year dividend to 22.8 pence, a 1% increase on the prior year. Net tangible assets were down 4% at 562 pence per share. Following the sale of our 50% stake in Meadowhall post period-end, pro forma LTV was 34.6%, down 140 basis points. And Group net debt to EBITDA was 6.4 times, flat year-on-year.
Let's now walk through our income statement, starting with gross rental income. The impact of the Paddington disposal in July 2022 and the surrender of 1 Triton Square by Meta in September 2023 were both key drivers of a 3% reduction in gross rental income. Property operating expenses reduced by 23% as a function of strong occupancy combined with the impact of the one-off collection from Arcadia in the first half. As a result, our net rental income margin was 92.4%, an improvement of 190 basis points.
Fees and other income increased by GBP5 million, as we continue to progress on our joint venture developments. And despite the inflationary environment, administrative expenses decreased GBP2 million to GBP87 million....
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British Land Company PLC (BTLCY) Q4 2024 Earnings Call Transcript