The majority of Land Securities’ borrowing is secured against a large pool of our assets (Security Group). At 30 September, £5,336.0m of our debt was secured against £9,993.3m of our assets, giving an LTV ratio of 53.4%. Our secured debt structure provides for different operating environments which apply in “tiers” determined by levels of LTV and Interest Cover Ratios (ICR), although it is LTV which is the more likely determinant of which operating environment applies. These ratios do not trigger an event of default until LTV exceeds 100% or projected ICR is less than 1.0 times. However, our operating environment becomes more restrictive at higher levels of LTV / lower levels of ICR. There are minimal operational restrictions on the Group in Tier 1 (LTV below 55%) and Tier 2 (LTV: 55% to 65%) although we are required to put in place progressively a liquidity facility as we move up Tier 2 and into initial Tier 3 (LTV: 65% to 80%). In Tier 3, our operating environment would be more restrictive with provisions designed to encourage a reduction in gearing including mandatory debt amortisation.
At 30 September 2008, we were in Tier 1 with a Security Group LTV of 53.4%, up from 50.5% at 31 March 2008. Despite the sharp decline in values in the six months, we were able to offset the expected rise in LTV by adding additional properties to the Security Group.
