Interest rate management


As the effect of changes in interest rates can have a considerable impact on the Group’s reported profits, it is appropriate to ensure that the Group’s net exposure to such changes is managed within acceptable limits.

The Group seeks to achieve this by having a broad target of 60% - 80% of total debt being fixed rate or capped. However, this target is flexible and the Group does not strictly adhere to it at all times. For example, if the Group’s view is that interest rates are likely to rise in the near or medium term, this could indicate that a higher percentage of total debt being fixed rate or capped may be appropriate.

The Group typically makes use of vanilla (rather than exotic) interest rate derivatives such as swaps, caps and collars.

At 31 March 2017*, 100% of the Group’s total drawn debt (including its share of non-recourse joint venture debt) was fixed rate or capped.

*Pro forma for US Private Placement refinancings, deferred proceeds from the sale of 73/89 Oxford Street and Rathbone Square (commercial) and special dividend.