British Land FD Lucinda Bell on constructing a future

CFO Interview: Lucinda Bell, group finance director of FTSE 100 company British Land

By Michelle Perry | CFO UK | Published 15:29, 01 October 12

BritiLandAs one of the few female finance chiefs among Britain’s top public companies the inevitable question of why there aren’t more women in executive positions is often asked of Lucinda Bell, chief financial officer of FTSE 100 company British Land.

She has clearly learned to rise above such clichéd questions with the response: “I’m quite gender-blind”, which is probably for the best given that she works in the mostly male-dominated construction industry.

Bell is however an even rarer kind of finance chief because she, unlike most CFOs in the FTSE 100, has worked her way up the ranks of British Land since joining the company in 1991. She had held a wide range of roles in finance, including the roles of director of tax and financial planning, before replacing Graham Roberts as group finance director in May 2011.

As well as being singled out as a female finance chief in a male-dominated industry, Bell has also had to contend with claims of nepotism. British Land has, in the past, been criticised for being run like a private business with family relations working as long-standing company advisers before later joining the company. Bell, whose father was former British Land director John Weston Smith, had herself previously worked at company auditors Binder Hamlyn (which was later bought by Andersen).

Whether or not Bell joined the company because of family connections is now a moot point, because she has more than earned her spurs during her first year as group FD, proving to the City that she is more than capable of filling her predecessor’s boots.

Last year she raised £2 billion – the largest amount raised by any real estate investment trust (REIT) in 2011. This compares to just £0.5 billion raised over the previous two years. Moreover she secured an average cost of debt of 4.6 percent, offering the property company a major “competitive advantage” in an uncertain economy.

The financing was raised through a variety of sources in a bid to spread the refinancing risk: such caution and the balancing of risk is perhaps another trait you could arguably attribute to women, but again she disputes any gender link, positive or otherwise.

Some of the financing was with banks – secured and unsecured – but perhaps more challenging given the constrained debt markets, Bell raised around $500 million in the US private placement market in her first foray there.

Last year she went to the US to do a private placement with the intention of raising about $200 million. She ended up taking over $480 million with an average life over 11.2 years and cost of funding under 1.5 percent over Libor, the inter-bank lending rate now engulfed in a transatlantic scandal. She says the attraction for US investors was that real estate is a long-term business.

From a CFO’s point of view what is attractive about the US private placement market is that if investors want to invest for different periods, they can each bid on what suits them and then the CFO can effectively pick and choose which bits to take, or as Bell says, “you can choose your sweet spots”.

“One of the trends in real estate finance is that some of the insurers are coming into the market. Our most recent financing had a US insurer coming in alongside a UK bank and that’s a trend you’ll see more of,” she says.

Anticipating trends

British Land is primarily focused on high-end in-town and out-of-town retail locations and on central London offices. Bell gets to see first-hand her business at work as she passes one of the developments near her offices in Marble Arch every day. Another key project is the so-called cheese grater, or Leadenhall Building, which is set to become one of the most iconic buildings in London’s Square Mile when it’s completed in 2014.

British Land’s stated aim is “to build the best real estate investment trust in Europe”, and the company has assets across the Channel, principally in Spain, where it is currently developing a retail park in Zaragoza. Bell rejects concerns about Spain’s spiralling economic outlook, the continuing eurozone debt crisis and British Land’s investment there, because “it’s a very small part of our business”.

Lucinda Bell“I wouldn’t say it’s time to downscale there [Europe] but we’re very much focused on the UK,” she says.

Despite the double dip, British Land continues to report robust results. Pre?tax profits were up a solid 5.1 percent to £269 million in the year to March. Against a backdrop of struggling retailers, British Land has fared well given that 61 percent of its portfolio is invested in retail (with 35 percent in offices) and the retail property market has been hit hard this year by collapses including Peacocks, Game Group and Clinton Cards.

“We delivered some very good results in a demanding environment. We feel positive about the outlook but in the medium term,” Bell says. “In the short term we can see that for real estate the important things are what happens to your values as well as the income you generate, and in the medium term there may be a bit of variability in values but we look at the long term.”

Because of the “polarisation” going on in the retail sector – “the good retail is getting better and the poor retail is getting worse” – British Land hasn’t been as affected as some of its rivals as its retail portfolio is so high-end. The reality is that high-end retailers attract shoppers who come from the more affluent classes who have been less affected by the double dip.

Bell says the company anticipated this change in retail over a number of years “and so adjusted our portfolio”.

“It’s about selecting the right assets and then ensuring we can future-proof them. If you look nationally at footfall last year it was down, but on our portfolio it was up and that reinforces the message about polarisation,” she explains.

By future-proofing she means understanding the changing nature of consumers and planning to suit those changes. With these criteria British Land has focused on the location as well as configuration of real estate spaces.

To further maximise assets, Bell says changes such as putting in mezzanine floors, so “you can drive the rent on the ground floor by putting in extra space”, have been critical, especially for some of the company’s main clients like Sainsbury’s and Tesco.

There is also the ruthless-sounding “cut and carve” in which you take a larger unit and cut it into two smaller units, resulting in a higher rent per square foot on each unit.

“That’s what it’s all about – growing the income,” Bell says.

Sainsbury’s, the UK’s third largest supermarket, has fared better during the double dip than rival Tesco, which has seen falling sales and has had to pull several investment projects. Tesco was forced to implement a recovery plan after issuing a profit warning in January, but if the struggles of key clients and changing shopping patterns worry Bell, she doesn’t show it.

“What you also see is that Tesco is now investing in its existing stores and many of them are those that we let to them. And that’s good for our business,” says Bell.

Bell also stands out in construction because on her way to the top she took the risky decision to work part-time to have a family. The decision was fully supported by British Land, which continued to nurture her career all the way to the top table.

“For those that chose to work part-time, we work hard to make it work. It’s not always about going up; it’s about going in other directions too,” she says.

The best bit of advice she can offer those wishing to make it to the coveted role of chief financial officer of a public company is to “follow your instincts”.

“I say that because in going part-time I wasn’t sure it was the right thing to do because I was at a senior level, but I felt it was the right thing to do,” she cautions.

“You could say it’s about taking risks. I’d say it’s more ‘follow your instincts’. It’s about judgements,” she says.

And judgements and the balancing of risk are two key skills in ever-greater demand of the modern finance chief – male or female – as an improvement in the global economic outlook continues to elude even the most respected of public companies.


CV: Lucinda Bell

May 2011-present: Finance Director, British Land plc

2001-2010: Head of Tax, British Land plc

1991-2001: Corporate Finance Executive, British Land plc

1986-1991: Audit Manager, Arthur Andersen

Moving with the times

British Land has, like its competitors, invested heavily in out-of-town retail parks. These were seen as a great solution to overcrowded town centres and escalating business rents. With the rise in car ownership and a growing affluent middle class with greater spending power, real estate companies saw a great opportunity and grasped it with both hands.

The success of the out-of-town retail parks was so great that arguably the shopping mall was killing rather than complementing the high street, and there is now a move to regenerate the high streets of Britain’s towns and cities.

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In the intervening years another phenomenon has grown to challenge retail parks and the high street – e-commerce. British Land FD Lucinda Bell, however, isn’t afraid of the impact the growth in online shopping and the regeneration of city centres may have on British Land’s out-of-town assets.

“If and when you do go shopping invariably it’s for a social experience as well. You might buy things online but people are still going to the shops to try things on, so the physical stores are an important part of the retailer’s overall offer,” she argues.

“It’s less important about whether they are in town or out of town, it’s about having a certain criteria. What we are seeing is a morphing of the out-of-town model with in-town shopping.”

It’s just this kind of hybrid retail centre that British Land is developing at Whiteley near the M27 in Hampshire, where, Bell says, you can expect to find the “sort of units you’d get on a retail park with more of a high street feel”.


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