Bold British Land defies age of austerity
British Land is convinced demand for well-located and good quality shop and office space will continue despite the UK's 'age of austerity'.
Prime location: British Land uses York House at London's Marble Arch as its head office and rents out the leftover space
The property giant made the bullish prediction as it unveiled a 12.5% rise in net asset value per share to 567p in the year to March 31.
The company beat the City's consensus forecast for NAV – a key measure of value for property firms - of 558p.
Underlying annual pre-tax profit was up 2.8% at £256m, and the dividend was maintained at 26p.
Chief executive Chris Grigg said British Land had outperformed the market and there was real momentum in the business.
'Our strong letting performance across our portfolio shows clearly that there is still demand from occupiers for the well-located prime retail and London office assets we provide and we expect this to continue,' he said.
Chairman Chris Gibson-Smith chipped in: 'We own some of the best retail assets in the UK, where consumers want to shop and retailers trade efficiently and profitably.
'While, as a nation, we have moved from "recession" to the "age of austerity", consumers are still shopping and good businesses are looking to grow.'
Last week, rival firm Land Securities posted a well-received 18% rise in NAV to 885p, giving a boost to the shares of property companies across the board.
Today, shares in British Land were down 18p at 574.5p.
View from the City
'Unlike leader peer Land Securities, British Land has a broader UK exposure to commercial property and is less endowed to special situations that boosted Land Securities last week,' said Keith Crawford of broker Peel Hunt. 'That said, the result is still commendable.'
Broker Oriel Securities described the results as 'solid', although there was not much to get excited about, and it maintained an 'add' recommendation.
'British Land continued to benefit from a high quality portfolio, focused on central London offices, retail parks, shopping centres and foodstores. The length and strength of income continues to be attractive with an average lease term to the first break of 11.5 years and an occupancy rate of 98%,' it said.
Nan Rogers of broker Collins Stewart said: 'With the exception of London's West End, we are cautious about the outlook for rental values. We are concerned therefore that premium ratings cannot be sustained and so we reiterate our sell recommendation.'
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