VALUATION REPORT In respect of: Valuation Advisory - British Land
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United Kingdom | May 2020 VALUATION REPORT In respect of: The British Land Company PLC Valuation Advisory Date of Valuation: 31 March 2020
30 Warwick Street London W1B 5NH
tel +44 (0)20 7493 4933 fax (0)20 7087 5555
www.jll.co.uk
The Directors Our ref 479500/AVR/BL
The British Land Company PLC York House
45 Seymour Street London Direct line +44 (0)20 7087 5709
W1H 7LX
Claire.Macken@eu.jll.com
For the attention of: Simon Carter
18 May 2020
Dear Sir
Terms of Reference
Addressee: The Directors
The British Land Company PLC York House
45 Seymour Street London
W1H 7LX
Reliance: Please note that this report is confidential to the party to whom it is addressed.
The Reports shall be addressed to the British Land Company PLC and may be relied on by the
British Land Company PLC and by members of the Group and by any other parties who have
received prior written consent from us in the form of a reliance letter, marked for the
attention of Nicola Thomas. We acknowledge and agree that, upon request from the British
Land Company PLC, we will grant reliance on the Report to reputable financial institutions
providing finance to the Group (including debt and swap providers) pursuant to a reliance
letter on terms reasonably satisfactory to us.
We hereby agree and consent to the publication or reproduction by the Company of the
Reports and/or the information contained therein in the following contexts:
1) The Group's Annual Report and Accounts;
2) The Group's Interim Results announcement;
3) Any regulatory press announcement, investor presentation or other document issued by
the Company in connection with items 1 or 2 above; and
4) The statutory accounts of each member of the Group required to be filed with the
Registrar of Companies (in England and Wales) or equivalent.
In addition, we agree and consent to a true copy of the Reports (or a summary thereof) being
uploaded to the Investor Relations page of the Group's corporate website.
Subject to the above, neither the whole nor any part of the Valuation Reports nor any
reference thereto may be included in any published document, circular or statement nor
published in any way by any member of the Group without our prior written approval and
our approval of the form and context in which it may appear.
Jones Lang LaSalle Limited
Registered in England & Wales Number 1188567
Registered Office 30 Warwick Street, London W1B 5NHTenure: Freehold / Leasehold assets
Valuation Date: 31 March 2020
Instruction Date: 11 July 2020
Instruction and Purpose of We have been engaged to undertake the valuations of the properties, listed in Appendix 3, for
Valuation: inclusion in the interim and annual consolidated financial statements of the Group, that is for
regulated purposes (financial reporting). We are advised that you prepare your financial
statements in accordance with the International Financial Reporting Standards (IFRS) and
we confirm that this advice accords with these accounting requirements.
Basis of Valuation: Our valuations have been prepared in accordance with the VPS 4 of the RICS Valuation
– Global Standards 2017 on the basis of Fair Value as defined for the purpose of financial
reporting under IFRS 13 (Fair Value Measurement) of the International Financial Reporting
Standards as revised from time to time. We confirm that the Fair Value reported is effectively
the same as Market Value.
The Report also complies with the requirements of a Regulated Purpose Valuation as defined
in the Red Book.
The report is subject to, and should be read in conjunction with the Standard Terms and
Conditions (as per our agreement the following provisions shall not apply to this
engagement: Clauses 7.2 and 7.3; Clause 13.1; Clauses 16.2 and 16.3; and Clause 17.1.) and
General Principles Adopted in the Preparation of Valuations and Reports which are attached
in Appendix 2.
Our maximum liability for any single claim (or series of claims arising out of the same or
substantially the same facts or circumstances) by you or your Affiliates in connection with
this engagement, whether caused by our negligence or breach of contract or otherwise, is
limited to the lower of: (i) 25 per cent. of the aggregate Fair Value of the Properties; or (ii)
£75,000,000.
Nothing in this letter shall purport to exclude or limit our liability for fraud or to the extent
that such liability may not be excluded or limited as a matter of law.
No allowance has been made for any expenses of realisation, or for taxation (including VAT)
which might arise in the event of a disposal and the property has been considered free and
clear of all mortgages or other charges which may be secured thereon.
Inspection: In accordance with your instructions we have inspected the properties for the purpose of and
in accordance with this instruction.
All significant parts of the properties were inspected internally and externally.
Personnel: Our core valuation team is led by the registered valuers Claire Macken MRICS, Christian Luft
MRICS and Cara Reynoldson MRICS.
We confirm that the personnel responsible for this valuation are qualified for the purpose of
the valuation in accordance with the RICS Valuation – Global Standards 2017 and are RICS
Registered Valuers.
© 2020 Jones Lang LaSalle IP, Inc. All rights reserved.Status: In preparing this valuation we have acted as External Valuers, subject to any disclosures
made to you.
Disclosure: We confirm that we do not have any material connection or involvement giving rise to a
conflict of interest and are in a position to provide an objective and unbiased valuation.
We shall inform you without delay if we become aware of any event or circumstance which
may give rise to a conflict of interest which would cause us to qualify the above declaration.
Assumptions: We have made no ‘Special Assumptions’.
Sources of Information: We have inspected the premises and carried out all the necessary enquiries with regard to
rental and investment value, Rateable Value, planning issues and investment considerations.
We have been provided with the following reports, which we have relied upon:
1) Individual property Tenancy Schedules including a Schedule of Areas;
2) Schedule of Occupational and Non-recoverable costs;
3) Service Charge Budget where applicable;
4) Licences for Alteration where applicable;
5) Deeds of Variation where applicable;
6) Licences to Assign where applicable;
7) Lease Variations where applicable;
8) Rent Review Memorandums where applicable;
9) Heads of Terms where applicable;
10) Site Areas where available;
11) Certificate of Title and/or Land Registry where available;
12) Specific information relating to the development for Bromley by Bow; including:
a. Development Programme;
b. Outline Order of Cost;
c. Summary of Proposed Areas;
d. Architect's drawings;
e. Planning information.
Material valuation The outbreak of the Novel Coronavirus (COVID-19), declared by the World Health
uncertainty: Organisation as a “Global Pandemic” on the 11th March 2020, has impacted global financial
markets. Travel restrictions have been implemented by many countries.
Market activity is being impacted in many sectors. As at the valuation date, we consider that
we can attach less weight to previous market evidence for comparison purposes, to inform
opinions of value. Indeed, the current response to COVID-19 means that we are faced with an
unprecedented set of circumstances on which to base a judgement.
© 2020 Jones Lang LaSalle IP, Inc. All rights reserved.Our valuations are therefore reported on the basis of “material valuation uncertainty”’ as per
VPS 3 and VPGA 10 of the RICS Red Book Global. Consequently, less certainty – and a higher
degree of caution – should be attached to our valuation than would normally be the case.
Given the unknown future impact that COVID-19 might have on the real estate market, we
recommend that you keep the valuation of this property under frequent review.
The retail and leisure sector has been suffering from many economic and structural
headwinds over the last few years. These headwinds have not gone away and, if anything,
may accelerate or be exacerbated as the impact of COVID-19 becomes clear. It is important to
comment that the speed at which COVID-19 is impacting the retail and leisure sector in the
UK is unprecedented. There are changes to the occupational and investment markets
occurring on a daily basis and we are continually analysing these to obtain the necessary
data points to provide Market Rents and Market Values.
In the short term there are winning and losing categories with food and convenience
performing well in the short term and fashion, leisure and F&B struggling. We are also
starting to see patterns emerging within the sub sectors with shopping centres and leisure
parks being hardest hit and retail warehousing less so. This will continue to evolve but it is
clear that there will be some sub sectors or occupiers that weather the storm better. It is
difficult to assess which operators will survive and which will not and government and
banking intervention will undoubtedly steer this.
In the medium to long term the retail and leisure sector will evolve to deal with the impacts
of societal and real estate changes. Technology has enabled people to shop remotely and
COVID-19 has accelerated the pace of change. Many people who have previously been
resistant to this will now perhaps find a new norm, forcing a change in retailer, landlord,
investor and council/government behaviour.
For the avoidance of doubt, the inclusion of the ‘material valuation uncertainty’
declaration above does not mean that the valuation cannot be relied upon. Rather, the
phrase is used in order to be clear and transparent with all parties, in a professional
manner that – in the current extraordinary circumstances – less certainty can be attached
to the valuation than would otherwise be the case.
Fair Value: We are of the opinion that the Fair Value of the freehold / leasehold interests in the
subject properties, subject to the existing tenancies as at 31 March 2020 is:-
£1,892,320,168
(One Billion Eight Hundred Ninety-Two Million Three Hundred and Twenty Thousand One
Hundred and Sixty-Eight Pounds)
© 2020 Jones Lang LaSalle IP, Inc. All rights reserved.This Value is categorised as follows:
Long Short Total Fair
Property Freehold* Leasehold Leasehold** Value
Held as £950,911,719 £941,408,449 - £1,892,320,168
investment /
owner
occupied
Held for - - - -
development
Undergoing - - - -
development
Total Value £950,911,719 £941,408,449 - £1,892,320,168
* For categorisation purposes, properties held on very long leases for terms over 950 years
have been classified as (virtual) freehold.
** Short leasehold properties are classified as those with less than 50 years unexpired.
Purchaser’s Costs: 6.8%, including Stamp Duty at 5.0%.
Confidentiality and Finally, and in accordance with our normal practice we confirm that the Report is
Publication: confidential to the party to whom it is addressed for the specific purpose to which it refers.
No responsibility whatsoever is accepted to any third party and neither the whole of the
Report, nor any part, nor references thereto, may be published in any document, statement
or circular, nor in any communication with third parties without our prior written approval of
the form and context in which it will appear.
Yours faithfully Yours faithfully
Claire Macken MRICS Christian Luft MRICS
Director Director
For and on behalf of Jones Lang LaSalle Limited For and on behalf of Jones Lang LaSalle Limited
Yours faithfully
Cara Reynoldson MRICS
Director
For and on behalf of Jones Lang LaSalle Limited
© 2020 Jones Lang LaSalle IP, Inc. All rights reserved.JLL offices JLL offices JLL offices London London London 30 Warwick Street 30 Warwick Street 30 Warwick Street W1B 5NH W1B 5NH W1B 5NH Claire Macken MRICS Christian Luft MRICS Cara Reynoldson MRICS Director Director Director Valuation Advisory Valuation Advisory Valuation Advisory London London London +44 207 0875 709 +44 207 8524 879 +44 207 8524 775 Claire.Macken@eu.jll.com Christian.Luft@eu.jll.com Cara.Reynoldson@eu.jll.com jll.com © 2020 Jones Lang LaSalle IP, Inc. All rights reserved. The information contained in this document is proprietary to JLL and shall be used solely for the purposes of evaluating this proposal. All such documentation and information remains the property of JLL and shall be kept confidential. Reproduction of any part of this document is authorised only to the extent necessary for its evaluation. It is not to be shown to any third party without the prior written authorization of JLL. All information contained herein is from sources deemed reliable; however, no representation or warranty is made as to the accuracy thereof.
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