Broadgate REIT Ltd

Broadgate REIT Limited

(the “Group”)

Please find attached the Interim Financial Statements for the Group for the period ended 30 September 2024.

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

Overview

Market Backdrop

Macro-economic backdrop

While geopolitical risk remains elevated and there has been some macroeconomic volatility around the recent Budget and US election, generally the UK macro backdrop is supportive. The base rate is declining, albeit more slowly than envisaged earlier in the year, the labour market forecast remains tight and real wages are growing modestly.

London Office Market

Take up of space in core Central London was 8% ahead of the 10-year average, despite overall take up of all space across London being 8% behind the 10-year average. 70% of this take up was for new and newly refurbished space.  The forward looking indicators are also encouraging with under offers, a key measure of demand, remaining high at 4.1m sq ft, 19% above the 10-year average. We are seeing particularly strong demand in the City with under offers 25% ahead of the 10-year average. Furthermore, active demand in Central London is at 13m sq ft, 34% ahead of the 10-year average. On the supply side, vacancy for the best space and the rest continues to diverge. Vacancy for new or refurbished space in core Central London is at 1.7%, while vacancy for the rest of space in Central London is 10.9%. 

Investment volumes this year have been very subdued particularly for larger lot sizes. However, in recent weeks there has been a noticeable increase in activity with a number of core investors re-entering the market and value add investors continuing to pursue refurbishment and repositioning opportunities.

Operational review

Broadgate saw a valuation decline of 1.6% driven by outward yield shift of 15 bps, offset by ERV growth of 2.8%. Occupancy remains high at 99%, reflecting the excellent quality of the space, amenities and public realm and its central location next to Liverpool Street Station. 

Leasing activity (excluding Storey) covered 577,000 sq ft, of which 508,000 sq ft were long term deals, 8.7% ahead of ERV. Significant deals include a new 77,000 sq ft letting to US law firm, Akin Gump Strauss Hauer & Feld LLP on recently surrendered, newly refurbished floors at 155 Bishopsgate and a pre-let with Citadel for 261,000 sq ft of workspace at 2 Finsbury Avenue, with options to lease up to another 121,000 sq ft. This means 2 Finsbury Avenue is already 33% pre-let at a minimum and c.50% pre-let if the option space is taken, at a record headline rent for the City. At 1 Broadgate, A&O Shearman have exercised their option to take 94,000 sq ft of space.

Storey: British Land’s flexible workspace offer

Storey is a key part of our campus proposition and provides 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 and overseas businesses looking to open a UK Headquarters.

Developments

The development of 1 Broadgate is progressing on programme and, with the exception of one floor, the office space is fully pre-let to JLL and A&O Shearman. In the half, A&O Shearman have exercised their option to take 94,000 sq ft of space within the building, demonstrating the strong demand for best-in-class, sustainable buildings.

Our near term pipeline includes the development of 1 Appold Street into a 401,000 sq ft best-in-class office building.

Sustainability

We are making good progress on improving the sustainability credentials of our buildings on the campus. 199 Bishopsgate achieved an EPC ‘A’ rating, up from a ‘B’. On our developments we have partnered with Madaster, a materials passport platform that will store key information about our buildings' materials to enable future reuse. Our social impact initiatives continue to focus on forging connections between our occupiers and local communities and we continue to support the Social Mobility Business Partnership’s Insights and Skills Programme alongside one of our occupiers and our service partners.

SUPPLEMENTARY TABLES

Committed Developments

1. Estimated headline rental value net of rent payable under head leases (excluding tenant incentives)
2. Gross yield on cost is the estimated annual rent of a completed development divided by the total cost of development including the site value at the point of commitment and any actual or estimated capitalisation of interest, expressed as a percentage return.