London Portfolio highlights

"We have maintained momentum in a demanding environment. Sales and lettings were above valuation, voids are down and our weighted average unexpired lease term has increased. We continued to reduce risk at major development schemes, crystallised value and created new opportunities through planning success."

10.2 years

Like-for-like London offices weighted average unexpired lease term, up from 8.7 years at
March 2011.


of investment lettings in the year.


valuation surplus for the year.



  • Valuation surplus of 3.9%
  • £623.8m of sales — 3.8% ahead of March 2011 valuation
  • £24.5m of investment lettings — 12.2% ahead of ERV
  • Like-for-like voids down from 3.8% to 2.5%
  • Longer weighted average unexpired lease term on the like-for-like portfolio, completed developments and acquisitions of 9.9 years (31 March 2011: 8.9 years)
  • 20 Fenchurch Street, EC3 development committed (in partnership with Canary Wharf Group)
  • Planning permission received at 1 & 2 New Ludgate, EC4, Kingsgate House, SW1 and 1 New Street Square, EC4
  • Joint venture partnership formed at Victoria Circle, SW1 with Canada Pension Plan Investment Board

How we create value

We aim to deliver growing rental income streams and higher asset values over the long term by:

  • Developing assets early in the cycle to maximise returns
  • Acting decisively to crystallise value and recycle capital
  • Creating high quality products that meet customers' changing needs
  • Being inventive and energetic in the way we manage our assets
  • Establishing partnerships to deliver and de-risk major developments

Progress against our objectives for 2011/12



Outperform IPD
  • The London portfolio underperformed its IPD sector benchmark by 2.5%.
Obtain planning consent and start on site at 30 Old Bailey and 60 Ludgate Hill, EC4 (now called 1&2 New Ludgate)
  • Consent obtained and demolition completed; construction will start to time completion to suit market conditions.
Complete office lettings at One New Change, EC4
  • The office element of the scheme was 83.0% let at 31 March 2012.
Progress on time and to budget at 62 Buckingham Gate, SW1; 123 Victoria Street, SW1; Wellington House, SW1; 20 Fenchurch Street, EC3; 40 Strand, WC2; and 110 Cannon Street, EC4
  • All of these schemes have progressed on or ahead of time and within budget. 110 Cannon Street, EC4 was sold in the year, crystallising value early.
Secure a joint venture partner for Victoria Circle, SW1
  • 50:50 partnership with Canada Pension Plan Investment Board formed in February 2012.
Complete detailed design at Arundel Great Court, WC2
  • Design and negotiations with occupiers both completed. Site prepared for demolition and subsequently sold.

London Portfolio like-for-like - rental and capital value trends % 12 months ended 31 march 2012

London Portfolio Like for Like

Voids and units in administration % - like-for-like portfolio

Voids and Units in Admin

London Portfolio by capital value £m

London Portfolio by capital value

London Portfolio floorspace 0.81 million m2

London portfolio floorspace

London Portfolio - tenant diversification group income

London Portfolio tenant


 % of Group rent
Central Government 5.9
Royal Bank of Scotland 2.6
Deloitte 2.6
Bank of New York Mellon 1.5
Taylor Wessing 1.4
K&L Gates 1.2
Metropolitan Police 1.1
Redbus Interhouse 1.0
EDF Energy 1.0
Microsoft 0.9
Office other 21.1
Total (all office tenants) 40.3

Top 3 Properties

Cardinal Place

1 – Cardinal Place

New Street Square

2 – New Street Square

One New Change

3 – One New Change

Development pipeline

123 Victoria Street


123 Victoria Street, SW1
21,110m2 of refurbished office and retail space in a West End location. Fashion retailer Jimmy Choo has pre-let 3,440m2.

62 Buckingham


62 Buckingham Gate, SW1
Construction is well underway on the office accommodation and retail this development will bring to the heart of Victoria.

20 Fenchurch Street


20 Fenchurch Street, EC3
Work with joint venture partner Canary Wharf Group is on schedule to deliver the building in spring 2014.

1&2 New Ludgate


1&2 New Ludgate, EC4
Providing 21,110m2 of office and retail space, this major refurbishment is progressing well and to budget and due to complete in August 2012. Fashion retailer Jimmy Choo has pre-let 3,440m2 of the space for use as its headquarters.

Kingsgate House


Kingsgate House,SW1
Planning consent has been received for 31,980m2 of office space, retail units and 100 prime residential apartments. Demolition is underway and the earliest date for completion is April 2015.

London Portfolio looking ahead

We continue to see an imbalance between supply and demand for high quality space in the medium term. Supply-constrained conditions are emerging slower than we expected this time last year, but we expect them to remain for longer as forecasts for the supply of new office developments were cut substantially during the year. A significant proportion of existing stock is unsuitable for the contemporary needs of occupiers and there is a higher than normal level of lease expiries due from 2013. This combination of factors will mean companies with office requirements will find they have less choice.

To put this in context, long-term average take-up of Grade A space in central London is 585,000m2 per annum. The take-up in 2011 was 510,950m2. The combination of current Grade A vacancy and forecast development completions which are not pre-let will only provide in the region of 370,000m2 per year in 2012, 2013 and 2014. Tall building developments in the City continue to attract media attention, but the current development commitments will make only a modest contribution to total floorspace.

Central London's residential and retail markets remain strong. London is the only city in Europe that can claim to meet the prerequisites for a truly global city - high quality of life; exceptional business infrastructure; a strong talent pool; excellent access to markets; good communication links; and a clear and reliable legislative framework. Uncertainty elsewhere serves to underline London's enduring strength as one of the world's most dynamic and successful cities.

Against this background, we will build on the advantages gained through re-starting developments in London first. We have an attractive mix of high quality assets with strong revenue streams. We have a clear plan for every asset and a pipeline of projects that will add significant floor space through development. We are well positioned.

Key Objectives for 2012/13

  • Outperform IPD sector benchmark
  • Progress development lettings at One New Change, EC4, 123 Victoria Street, SW1, 62 Buckingham Gate, SW1 and 20 Fenchurch Street, EC3
  • Practical completion on time and to budget at Wellington House, SW1 and 123 Victoria Street, SW1
  • Progress on time and to budget at 62 Buckingham Gate, SW1 and 20 Fenchurch Street, EC3
  • Demolition of Kingsgate House, SW1 and commencement of demolition at Victoria Circle, SW1
  • Submission of planning applications at Portland House, SW1 and Oxford House, W1