CEO Review

Over a 12 month period we benchmark our performance against three key indicators, providing shareholders with a clear indication of the value we are creating. Over a six month period, however, the most relevant indicator of our performance is a comparison to the Investment Property Databank (IPD), the industry standard for commercial property performance in the UK. During the period under review, our ungeared investment portfolio total return was 3.6% as compared to 1.3% for the IPD Quarterly benchmark. Our outperformance is largely attributable to the timing and execution of our development programme; this has delivered substantial valuation surpluses, which accounted for more than the whole of our overall revaluation surplus. Our financial performance also benefited from the timing of our sales of £929.1m of investment properties, where the sale prices were on average 7.8% above valuation (pre-disposal costs).

The defensive income characteristics of our investment portfolio have strengthened over the period. As a result of major development lettings, the average unexpired duration of leases has increased by half a year to approximately 10 years; and the net reversionary potential of the portfolio (the extent by which today’s rental values exceed rents currently payable) has increased from 10.6% to 14.5%.