Broadgate REIT Ltd

Broadgate REIT Limited

(the “Group”)

Please find attached the Financial Statements for the Group period ended 31 March 2023.

The Group also provides the following information by way of a trading update at this time:

Overview

Market Backdrop

Macro-economic context

The macroeconomic backdrop in the UK was volatile in the period. Geopolitical tensions, high inflation and successive Bank of England interest rate rises since early 2022 have resulted in lower GDP growth forecasts. The UK has thus far avoided a recession, consumer confidence has been resilient and labour markets remain robust with unemployment at [3.8%]. However, sentiment is fragile and the outlook remains uncertain.    

London Office Market

Central London office occupational markets have remained robust over the year. Banking & finance, professional services and creative industries were the largest sources of take up with consolidation in some sectors (notably legal) an important factor. As businesses evaluate their workspace requirements, demand continues to gravitate towards the very best space, with an emphasis on sustainability, shared and flexible space and excellent transport connections. This ‘flight to quality’ in offices helps occupiers attract and retain staff in a competitive jobs market, as well as helping them meet their net zero goals. Recent research from CoStar highlights net absorption rates of best in class, sustainable space has been positive with vacancy rates falling and rents climbing. In contrast net absorption rates for older offices have been strongly negative since the pandemic began, with far more tenants leaving than moving in, widening the gap between ‘the best and the rest’.

Investment markets were subdued in the financial year with investors pausing to assess the impact of rising interest rates and inflation.

Operational review

Leasing activity covered 378,000 sq ft (excluding Storey), of which 248,000 sq ft were long term deals, completed on average 2.6% ahead of ERV. Broadgate occupancy is 94.9%.

The most significant was a regear to Credit Agricole at Broadwalk House, covering 116,550 sq ft and extending their lease by five years to 2030. In this case, we have worked closely with the customer to deliver energy efficient interventions which progress our net zero plans and generate efficiencies for Credit Agricole, which is particularly in the context of higher energy prices. We are underway with significant asset management initiatives at 199 Bishopsgate totalling £35m where we have taken the opportunity to incorporate energy efficient interventions at little incremental cost since they are part of the wider refurbishment.

We have made some exciting additions to our food and beverage offer with Los Mochis, a pan-Pacific concept opening a 14,000 sq ft flagship restaurant on the rooftop of 100 Liverpool Street. New additions such as this encourages footfall to our campus which is benefitting from the opening of the Elizabeth Line.

The Campus saw a valuation decline of 16.5% driven by outward yield shift of 69 bps, partially offset by ERV growth of 1.6%.

Flexible workspace

Flexible workspace (which is provided by Storey, British Land’s flexible workspace offer) is an important part of our Campus proposition, providing occupiers with the flexibility to expand and contract depending on their requirements . The quality of the space, central location and access to Campus amenities make the space appealing to scale up businesses. Customers also benefit from access to ad hoc meeting and events space at Storey Club and this service is an increasingly important factor when making workspace decisions.

 In H2, we launched 23,000 sq ft of Storey space at 155 Bishopsgate, which has been let in its entirety to Levin Group for its new London Headquarters. The deal was Levin Group’s third upsize at Broadgate, having initially taken space at 1 Finsbury Avenue before taking additional space in the neighbouring unit and at 100 Liverpool Street.

Developments

The Committed pipeline comprises 1 Broadgate (544,000 sq ft), which is on track to be both BREEAM Outstanding and NABERS 5*. The office space is fully pre-let or under option to JLL and Allen & Overy, four years ahead of practical completion, demonstrating the heightened demand for best in class, sustainable buildings.

The largest scheme in the near term pipeline is 2 Finsbury Avenue, where we have planning for a 747,000 sq ft best in class, sustainable office building. Although the development is not committed, we have commenced demolition and basement works to maintain optionality.

Social Sustainability

One of our key social impact initiatives on the Campus was New Diorama Theatre (NDT) Broadgate, which ran for 18 months and ended in July 2022, provided over [20,000] sq ft of creative space free to independent and freelance artists. Over [8,800] artists used the space, making more than [250] new shows, and an independent economic impact report found it generated £[40]m of additional gross revenue for the UK economy, supporting over [1,000] full time jobs. In addition, Broadgate Connect, an ongoing employment initiative on the Campus supported 138 local job seekers this year with 44 placed into work. In connection with the Young Readers Programme partnering with the National Literacy Trust, 372 school children participated in activities across the campus.

SUPPLEMENTARY TABLES

Committed Developments

1. From 1 April 2023. Cost to come excludes notional interest
2. Estimated headline rental value net of rent payable under head leases (excluding tenant incentives)
3. Pre-let & under offer excludes office space under option

Near Term Development Pipeline

1. From 1 April 2023. Cost to come excludes notional interest
2. Estimated headline rental value net of rent payable under head leases (excluding tenant incentives)

Medium Term Development Pipeline

All enquiries in relation to this announcement should be addressed to:

CAREY OLSEN CORPORATE FINANCE LIMITED

Listing Agent

Tel: +44 (0)1534 888 900

END OF ANNOUNCEMENT