Divisional key characteristics:
long-term business, highly cash generative, high margins.

Within this division, contributions come from two areas of operation:

Trading

Regulated (Investment value: £939m)

Key features:

• Tenant has security of tenure
• Rents set by rent officer and increases capped at retail price index +5% over two years
• Purchased at discount to vacant possession value and sold on vacancy
• Approximately 8% of the portfolio becomes vacant every year
• No new regulated tenancies being created

Characteristics: Low rental yield, high margin on sales.

Life tenancy (Investment value: £167m)

Key features:

• Tenant has security of tenure
• No rental income
• Whole or partial ownership purchased at discount to vacant possession
• Property sold on vacancy
• No maintenance obligation

Characteristics: No rental yield, high sales margin.

Assured, vacant and others (Investment value: £223m)

Key features:

• Market rented tenancies (£136m)
• Vacants to be sold (£49m)
• Other (including ground rents and serviced apartments £38m)

Characteristics: Market yield, some margin on sale.

Rental and management

Net rental income

Key features:

• Net rental income derived from regulated and assured tenancies after maintenance and management expenditure

Asset and management fees

Key features:

• Fee based activities remunerated by asset and property management fees

Characteristics: Management skills adapted to provide additional fee income with no capital investment.