Annual Report 2011 Where to get more information Online Annual Report www.landsecurities.com/ annualreport2011 Read/Watch/Download centres Videos featuring key stories from the year Executive team review of 2010/11 Bespoke, downloadable Annual Report Chart generator for easy year to year comparisons Latest news from the Group Corporate Responsibility Report Corporate website www.landsecurities.com/responsibility www.landsecurities.com Our approach to Corporate Responsibility Latest information for investors Key activities and achievements in 2010/11 Our vision, strategy, objectives and values How CR supports our business strategy Information on our Retail Portfolio and How we work with our stakeholders London Portfolio What CR means to our employees Structure and Senior Management Targets for 2011/12 at Land Securities – Corporate Responsibility – Media centre Working at Land Securities Frequently asked questions Over the last 12 months, we pushed ahead with development in London and made an early start on construction in Retail. We spotted opportunities to realise and recycle capital from sales. We acquired assets with excellent potential. And we continued to set new standards for sustainability. In a rising market full of promise, we are setting ourselves apart by 02—16 See what we’ve been up to 02 Trinity Leeds 04 Sainsbury’s, Lincoln 06 20 Fenchurch Street, EC3 08 Westgate Centre, Oxford 10 Buckingham Gate, SW1 12 Buchanan Street, Glasgow 14 Park House, W1 Trinity Leeds Some observers believe it’s too soon to restart major retail development. At Leeds, we take a different view. This UK ‘Top 5’ city has the potential to become an even bigger attraction. Which is why we’ve pushed ahead with construction at Trinity Leeds, making it the fi rst large retail scheme to get the go ahead since the fi nancial downturn. The scheme is already nearly 60% let, two years ahead of opening in spring 2013. 02 03 04 Sainsbury’s, Lincoln Some people think supermarket lettings are old news. We see a thriving market sector that’s full of opportunity. Take our work with Sainsbury’s. Through the Harvest joint venture we’re applying our property expertise to deliver new stores and formats, like this innovative extension in Lincoln. By helping to make a difference for their customers, we’re creating value for our shareholders. 05 20 Fenchurch Street, EC3 Some people think we’re brave to be building a tower in London so soon after the fi nancial downturn. We see supply-constrained conditions ahead. That’s given us the confi dence to restart construction at key development sites, including 20 Fenchurch Street. With a spectacular tree-lined botanical garden on the top fl oors, this scheme is creating 37 fl oors of truly exceptional commercial space right in the centre of the City. 06 07 08 Westgate Centre, Oxford Some might question why we have acquired 50% of the Westgate Centre in Oxford. Although the city is relatively small, it’s one of the most affl uent locations in the UK and hosts thousands of students and visitors. It’s also signifi cantly under-served in terms of great retail. So we see all sorts of opportunities to create a shopping destination that’s as smart as its surroundings. 09 Buckingham Gate, SW1 Some see the exodus of Government departments from SW1 as a risk for landlords like us. We see an extraordinary opportunity to transform one of London’s busiest centres. Our Buckingham Gate development will be at the heart of the change, providing state-of-the-art offi ces, street level shops and restaurants – all due for delivery in spring 2013. 10 11 Buchanan Street, Glasgow Some people saw these buildings as a complicated, unattractive site stuck in administration. We spotted an opportunity to unlock value and acquired the asset in December 2009. We see great times ahead. The asset sits in the heart of Glasgow’s stylish shopping district, directly opposite our Buchanan Galleries centre. Retailers share our vision, and at March 2011 69% of the scheme was pre-let. 12 13 Park House, W1 Just a few years ago this site was simply a hole in the ground. We saw its potential and laid the foundations for a stunning mixed-use development. When completed in 2012, Park House will provide contemporary offi ce space, luxurious Mayfair apartments, and stylish shops on Europe’s busiest high street – Oxford Street. The quality of our scheme quickly attracted a buyer and we sold the site for £296m this year. 14 15 By during the year, we have been able to spot and address some excellent opportunities. From making an early start on development to acquiring assets with hidden potential, we have been clear-sighted and confi dent in our pursuit of value creation. Over the following pages we report on our year in more detail, and show how our actions have translated into fi nancial returns for shareholders. The essential read 18 17—28 In this section Some background on who we are 18 Who we are From modest beginnings in 1944 to our position as the UK’s largest REIT; some important background 19 information on the Group Our management and our two business areas. 18 Our strategy Our approach to running our business, focusing on customer needs and creating shareholder value. 19 18 18 Our market The vision The market areas and Defi ning the market areas we that guides us customers we serve address and where our activity is focused. 24 20 19 Our management Our top 20 properties by value What we achieved From our executive team to this year our approach to governance, remuneration and corporate responsibility. 19 Our vision and values The fundamental principles that guide our business and the way we work together. 20 Our performance at a glance How we performed during the year, including commentary on Retail and London. 26 22 Key performance indicators Some of the year’s top stories The objectives, measures and achievements that are driving our results. 23 Our valuation How the valuation of our port- folios changed during the year. 24 Top 20 properties Analysis of our most valuable holdings across the Group. 26 Our year at a glance Some of the biggest stories, including the arrival of a new landmark in London. 28 Our outlook The conditions we see ahead in our markets and the key objectives we have set. Land Securities Annual Report 2011 17 The essential read Who we are Land Securities is a FTSE 100 company and the largest Real Estate Investment Trust (REIT) in the UK on the basis of market capitalisation. Founded by Harold The Company buys In one of Britain’s The property crisis Downturn turns The Company We enter the We now own and Samuel when he key London assets biggest property of 1974 requires the to growth. Land capitalises on Property Outsourc- manage more than acquired Land Securi- and acquires develop- deals at the time, sale of assets valued Securities moves the downturn to ing market with the 2.8 million m2 of ties Investment Trust ment company Land Securities at £200m. into the retail buy a number of purchase of Trillium commercial property. Limited. Ravenseft Properties. took over The City warehouse sector. shopping centres. in 2000. We convert of London Real to REIT status in 2007, Property Company. and sell Trillium in 2009. Our strategy Our market Our strategy is simple: to be at the forefront Combined portfolio value £10.56bn of meeting the space requirements of our Retail customers and to provide an attractive total return for our shareholders. We focus on the two largest segments of the UK London commercial property market – retail and London offi ces – which gives us a broad range of opportunities and a high-quality Overview tenant base. We are focused on the two largest segments of the UK commercial property market – retail and London offi ces. These markets are In these market segments, we have strong relationships with occupiers cyclical and respond to macro-economic trends. They are also and specialist expertise. We allocate capital to exploit our skills and affected by specifi c national and local infl uences such as planning, appropriate risk-return opportunities through the cycle. employment and general business activity. In property investment, we add value through active management of assets and the timing of acquisitions and disposals. Retail In development, we create value by delivering the right product at the We own, manage and develop shopping centres and retail parks right point in the cycle while keeping a tight focus on cost and timing. across the UK. Our assets are in key locations that have either a The Group’s Board directs strategy. It also monitors the proven record of trading success or excellent potential for future balance sheet and fi nancial performance to ensure capital is allocated success. For more information on the retail market please see p44. appropriately – both across the two business areas and between investment and development activity. Each business area benefi ts London from the Group’s highly rated debt structure and its access to We own, manage and develop a portfolio of offi ce properties in the attractively priced debt fi nance. capital complemented by retail and residential accommodation. Our assets are concentrated in central London, from Victoria in the west to the City in the east. For more information on the London market please see p52. 18 Land Securities Annual Report 2011 The essential read Our management Our vision Executive team Our vision, ‘Shaping the future of property’, Francis Salway Richard Akers Chief Executive Managing highlights our ambition to set the standards Director, Retail Portfolio for tomorrow in our industry.