Unsecured and secured debt

Unsecured debt

As at 30 September 2023, the Group had unsecured debt of £1.3 billion comprising

  • £585 million of US private placements, issued in 2011, 2013, 2018 and 2019. Outstanding amounts are:
    • $85 million Senior Notes (£53m equivalent) maturing in 2026 (swapped back to Sterling at an effective rate of SONIA+ 173 bps).
    • £200 million Senior Notes 2026 swapped to an effective rate of SONIA + 115 bps
    • £231 million Senior Notes in 4 series with maturities up to 2028, swapped to an effective rate of SONIA + 136 bps
    • £100 million Senior Notes 2034 swapped to an effective rate of SONIA + 148 bps
  • £300 million of sterling unsecured bonds
  • £438million of bank loans and overdrafts

Covenants applying across each of these unsecured facilities (having been consistently agreed with all lenders since 2003) are the same:

a) Net Borrowings not to exceed 175% of Adjusted Capital and Reserves. At 30 September 2023, this ratio was 39%
b) Net Unsecured Borrowings not to exceed 70% of Unencumbered Assets. At 30 September 2023, this ratio was 33%

No income/interest cover ratios apply to these facilities.

There are no other unsecured debt financial covenants in the Group.

The assets of the Group not subject to any security were £3.7 billion as at 30 September 2023.

Although secured assets and other assets of non-recourse companies are excluded from Unencumbered Assets for the covenant calculations, unsecured lenders benefit from the surplus value of these assets above the related debt and the free cash flow from them. During the 12 months ended 30 September 2023 these assets generated £35 million of surplus cash after payment of interest and securitisation amortisation. In addition, while investments in joint ventures do not form part of Unencumbered Assets, cash generated by these ventures are passed up to the Group.

Derivatives, usually interest rate swaps, are used to achieve the required interest rate profile viewed across all the Group debt.

Secured debt

As at 30 September 2023, the Group had secured debt of £0.9 billion comprising secured debentures and other secured debt including

  • £0.6 billion of debentures issued by British Land are secured against a single combined pool of assets with common covenants. The covenant requires the value of those assets to cover the amount of these debentures by a minimum of 1.5 times and net rental income to cover the interest at least 1 times. We use our rights under the debentures to withdraw, substitute or add properties (or cash collateral) in the security pool, in order to manage these cover ratios effectively, deal with any asset sales and remedy if necessary
  • £0.3bn of bank loans issued by our subsidiary Hercules Unit Trust, which is non-recourse to British Land