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British Land has reported a further hit of 22 per cent to net asset values (NAV) at its half-year stage, resulting in a 10.8 per cent fall in the value of its property portfolio since the end of March.
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Offices were the biggest faller, losing 13.2 per cent of their value in the past six months, followed by retail, which slumped by 8.9 per cent. Tenants in administration account for just 0.6 per cent of British Land's rent roll. In the City, the company is concluding direct rental deals with sub-tenants in the former Lehman Brothers building, which account for 78 per cent of the annual £15.8m rental income.
Finance director Graham Roberts stressed the underlying strength of British Land's balance sheet, emphasising that debt is fixed at average interest rates of 5.3 per cent with a maturity of 13 years. Undrawn banking facilities of £2.7bn are available. Despite the slide in values, the portfolio maintained high occupancy levels of 97 per cent, and the average lease length is 13 years.
| British Land (BLND) | ||||
|---|---|---|---|---|
| ORD PRICE: | 529p | MARKET VALUE: | £ 2,705m | |
| TOUCH: | 528-529p | 12-MONTH HIGH: | 1,056p | LOW: 508p |
| DIVIDEND YIELD: | 6.9% | DEV PROPERTIES: | £418m | |
| INVEST PROPERTIES: | £8.32bn | NET DEBT: | 85% | |
| DISCOUNT TO NAV: | 49% | |||
| Half-year to 30 Sep | Net asset value (p) | Pre-tax profit (£bn) | Earnings per share (p) | Net div per share (p) |
|---|---|---|---|---|
| 2007 | 1327 | -0.35 | 0.00 | 17.50 |
| 2008 | 1034 | -1.33 | -258 | 18.75 |
| % change | -22 | - | - | +7 |
Ex-div:12 Jan Payment:13 Feb |
||||
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"Prime property will reach its floor quicker, and we would expect our portfolio to bottom-out earlier," he said, adding that the company hopes to announce a successor to outgoing chief executive Stephen Hester before Christmas.
Broker Citi forecasts full-year NAV of 1,008p, falling to 939p in 2010.
With property values still falling and new development stalled, all eyes are on rental income. Unless big lettings or vulture purchases distract investor attention away from this area, shares remain high enough at 529p.
LAST IC VIEW: High enough (722p, 15 Aug 2008)
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