Excluding the inevitable post-referendum valuation movements left British Land (BLND) with underlying post-tax profits of £199m in the six months to September; that's up from £171m a year earlier. Clearly, the fallout from the referendum result has put an end to any yield compression in London, but rents appear to be holding up well. So despite disposal of non-core retail assets of £690m (at 4 per cent above March 2016 values), net rental income rose marginally to £312m.
However, performance varied across different sectors. Retail was less affected than the office sector, but overall the group still managed to complete 769,000 sq ft of lettings and renewals at an average 11.6 per cent ahead of estimated rental value, with average lease terms of nine years. And, although down slightly, occupancy rates remained high at 98 per cent of the portfolio.
Given the clouded outlook, chief executive Chris Grigg expects to proceed "more cautiously" on the development side, although the construction programme at under £700m is just 5 per cent of the portfolio value. However, it remains committed to starting the 520,000 sq ft of 100 Liverpool Street at Broadgate, which is expected to double rental income. The site is especially attractive as it sits on the Crossrail route due to open in 2018.
Analysts at Peel Hunt are forecasting adjusted net asset value (NAV) of 852p for the year ending March 2017 (from 919p in 2016).
| THE BRITISH LAND COMPANY (BLND) | ||||
|---|---|---|---|---|
| ORD PRICE: | 586p | MARKET VALUE: | £6.03bn | |
| TOUCH: | 586-586.5p | 12-MONTH HIGH: | 853p | LOW: 500p |
| DIVIDEND YIELD: | 4.9% | TRADING PROP: | £323m | |
| DISCOUNT TO NAV: | 34% | |||
| INVESTMENT PROP: | £12.6bn# | NET DEBT: | 52% | |
| Half-year to 30 Sep | Net asset value (p**) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p*) |
|---|---|---|---|---|
| 2015 | 919 | 823 | 79.8 | 14.2 |
| 2016 | 891 | -205 | -19.0 | 14.6 |
| % change | -3 | - | - | +3 |
Ex-div: 5 Jan Payment: 10 Feb *Dividends paid quarterly XD and pay date refers to second-quarter dividend of 7.3p **Adjusted NAV #Includes investments in joint ventures | ||||
