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British Land - Expecting a more cautious approach

Nicholas Hyett | 18 July 2016 | A A A
British Land - Expecting a more cautious approach

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British Land Co plc Ordinary 25p

Sell: 463.80 | Buy: 463.90 | Change -10.10 (-2.13%)
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British Land has reported a good quarter of activity in the run-up to the EU referendum. However, in a comment accompanying results, CEO Chris Grigg noted that while it was "too early to properly assess the impact of the referendum result on the markets in which we operate...we do expect some occupiers and investors to take a more cautious approach". The shares opened down 0.5%.

Pre-referendum the group completed 256,000 sq ft of Retail lettings and renewals, 14.8% ahead of estimated rental value (ERV), with a further 240,000 sq ft under offer. Retail footfall was flat in the quarter, 260 basis points ahead of the benchmark, while retailer sales were up 0.2%, 50 basis points ahead of the benchmark. The group completed 25,000 sq ft of Office lettings and renewals, 3.8% ahead of ERV.

In the weeks following the referendum the Group has exchanged contracts on the £400m sale of Debenhams' flagship Oxford Street store and agreed 17 long term retail leases at 9.5% ahead of ERV. The Leadenhall building is now fully let with Kames Capital and MS Amlin completing on a further 20,000 sq ft.

At the end of the quarter the group had 99% occupancy with weighted average lease terms of 9 years to first break. Following disposals proportionately consolidated loan-to-value (LTV) reduces to 29.7% (March 2016: 32.1%) with weighted average interest of 3.5% (March 2016: 3.3%). Based on current commitments, the Group has no requirement to refinance for four years and has confirmed the first quarter dividend at 7.3p (3% ahead of the prior year).

This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research for more information.