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British Land - Portfolio values fall

Equity research team | 16 November 2016 | A A A
British Land - Portfolio values fall

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No news or research item is a personal recommendation to deal. All investments can fall as well as rise in value so you could get back less than you invest.

British Land Co plc Ordinary 25p

Sell: 510.60 | Buy: 511.20 | Change -3.60 (-0.70%)
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Portfolio values fall

Despite the referendum British Land have seen underlying profit, excluding movements in property values, increased 16.4% to £199m. This was driven by like-for-like income growth of 3.4% and lower finance and operating costs. However, portfolio net asset value (NAV) fell 3% as a result of revaluations.

British Land announced a dividend of 7.3p for the quarter, taking total first half dividend to 14.6p, 3% ahead of last year.

The shares were flat in early trading.

Half Year Results:

The group let 769,000 sq. ft. in the half, on average 11.6% ahead of estimated rental value (ERV). Of this, 60% was in the period after the referendum. This leaves the portfolio 98% let, with an average lease of 9 years.

The value of the group's office and residential portfolio, mostly in central London, fell 3.3% - versus 2.4% in the group's more national retail and leisure portfolio. Retail has seen a further movement towards retail park assets with multiple tenants, following the disposal of £690m of non-core Retail assets. Multi-let now accounts for 76% of the Retail portfolio.

Proportionally consolidated loan to value (LTV) fell 0.5 percentage points to 31.6%, (March 2016: 32.1%), with the weighted average interest rate also falling to 3.2% (March 2016: 3.3%).

Outlook:

Since the referendum British Land has seen continued momentum in Retail but increased caution in Offices. The group believes its high quality portfolio puts in a strong position as occupiers become more discerning. However, the group has said that it will take a cautious approach to speculative developments while the outlook remains uncertain.

Unless otherwise stated, all estimated figures, including prospective dividend yields, are taken from a consensus of analyst forecasts compiled by Thomson Reuters. These estimates should not be taken as a reliable indicator of future performance.

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.