Contact

Investment case

 

Our key performance indicators (KPIs) measure the principal metrics that we focus on to run the business and they help determine how we are remunerated. Over the longer term, we aim to outperform our benchmarks through successfully executing our strategy. Over the last 12 months, given our strong operating performance, we have outperformed the majority of our benchmarks (financial and non financial).

Total Shareholder Return % (TSR)


Rationale

TSR is a standard measure of shareholder value creation over time. It measures the movement in a company’s share price plus dividends expressed as an annual percentage movement.

Commentary

TSR of the Group is benchmarked against the TSR of the FTSE 350 Real Estate Index (excluding agencies). The TSR of the Group was +6.6%1 for the year, compared to +20.8% for the benchmark following strong share price performance of other real estate sectors, including those providing self storage, industrial and logistics space.

Alignment with remuneration: LTIP and Exec Bonus

Total Accounting Return % (TAR)


Rationale

TAR is measured as absolute EPRA NTA per share growth (the industry standard measure of a real estate company’s success at creating value) plus any ordinary dividends paid, expressed as a percentage of the period’s opening EPRA NTA.

Commentary

We have typically compared our TAR to a target year on year growth of 4% or more. TAR was +8.8% for the year. The TAR outperformance was primarily driven by the robust property value growth of 6.1% on a like-for-like basis.

Alignment with remuneration: LTIP and Exec Bonus

Total Property Return % (TPR)


Rationale

TPR measures a company’s performance at driving value from its property portfolio. It is calculated from the net capital growth of the portfolio plus net rental income derived from holding these properties plus profit or loss on disposals expressed as a percentage return on the period’s opening value as calculated by MSCI.

Commentary

TPR is compared to a benchmark of around £50 billion of similar assets included in the MSCI central London annual benchmark. When compared to the annual benchmark of 7.0%, the Group generated a portfolio TPR of 9.4%, outperformance of 2.4% for the year. This outperformance was driven by our committed and recently completed development schemes, along with GPE delivering a record leasing year.

Alignment with remuneration: LTIP and Exec Bonus

Non-Financial KPIs

Given the growing importance of sustainability, and our wider stakeholders to the success of our business, we introduced five new non-financial KPIs for 2020/21. Each of these KPIs are performance criteria for senior executive remuneration (see key below), with performance against our sustainability KPIs measured in aggregate.

Energy Consumption % reduction

24.4%

Benchmark: 11.5%

Rationale

The energy consumption of our portfolio was 48% of our carbon footprint during the year. Lowering our energy intensity is an essential part of delivering our Roadmap to Net Zero.

Commentary

Our target is to reduce energy intensity by 40% by 2030, when compared to our 2016 baseline. While a number of projects were undertaken during the year to improve energy intensity, our performance also continued to benefit from lower occupancy levels due to the pandemic.

Alignment with remuneration: Exec Bonus

Embodied Carbon % reduction

22.0%

Benchmark: 10.0% New developments

Rationale

Embodied carbon from our development activities represents around 40% of our carbon footprint. Reducing our embodied carbon is key to delivering our Roadmap to Net Zero.

Commentary

Our target is to reduce the embodied carbon from our development and refurbishment activities by 40% by 2030. Our significant progress on building design resulted in the Group outperforming its targeted 10.0% reduction for new developments at the design stage.

Alignment with remuneration: Exec Bonus

Biodiversity % increase

2.0%

Benchmark: 8.0%

Rationale

Biodiversity is essential for climate resilience and health and wellbeing. We aim to increase biodiversity across our portfolio by introducing urban greening to improve air quality, reduce the urban heat island effect and provide habitats for insects and birds.

Commentary

Our target is to increase biodiversity net gain across our portfolio by 25% by 2030. This year, postponed urban greening works at some of our operational buildings resulted in the Group not meeting its annualised target of 8.0%.

Alignment with remuneration: Exec Bonus

Customer Satisfaction (NPS)


Rationale


High levels of customer satisfaction are critical to both attracting and retaining businesses in our buildings.

Commentary

The Net Promoter Score (NPS) of the Group is compared to the overall UK sector average, expressed as a number between -100 and +100, with a minimum target of the sector average. Our NPS of +27.8 significantly outperformed the UK office average of +2.0, or upper quartile performance against London office property peers.

Alignment with remuneration: Exec Bonus

Employee Engagement % (EII)


Rationale

Maintaining high levels of employee engagement is key to motivation, productivity and ultimately the delivery of our business plans.

Commentary

The Employee Engagement Index (EII) of the Group is compared to a 75% hurdle. Our EII continues to be exceptionally high, with 92% of our employees participating in our latest survey delivering an EII of 86%

Alignment with remuneration: Exec Bonus

New Financial KPI for 2022/23

Flex Growth

Growing our Flex space forms a key part of the Group’s strategy and will be a new KPI and a financial measure within the Annual Bonus structure for 2022/23.

Key

LTIP 

Performance criteria for Executive Directors’ and certain senior managers’ long-term incentives.

Exec Bonus 

Performance criteria for Executive Directors’ and all employees’ annual bonuses in the case of the financial KPIs and certain senior executives’ annual bonuses in the case of the non-financial KPIs.

For the 2020/21 and 2021/22 annual bonuses, TAR was exceptionally replaced with TSR as the applicable metric.

We would like to set performance and analysis cookies to help us to improve our website. Please click accept to allow us to do so. For more information, please see the “visit this website” section of our privacy notice