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Flat half for British Land

Holding NAV steady in the first half was a decent result for against a falling market for Britain's second-largest listed property company
November 20, 2012

British Land's (BLND) results could have been worse. Analysts had been worrying about the commercial landlord's retail exposure - shops make up three-fifths of its portfolio - but valuations in most sectors proved surprisingly robust. Superstores were marked up 0.5 per cent thanks to fixed rental uplifts, and the sale of half of Meadowhall to the Norwegian Sovereign Wealth fund at a heroic valuation helped offset falling rents in the shopping centre portfolio. Overall, the group's UK retail arm was marked down by 1 per cent, the notable drag being retail parks.

IC TIP: Buy at 520p

As expected, offices performed better, with a revaluation of 2.2 per cent driven by the development pipeline. British Land will complete three schemes in the West End next year, including a major development near Euston station called Regent's Place. It also has two major projects in the City; the so-called Cheesegrater tower on Leadenhall St and the redevelopment of its office estate at Broadgate, which is fully pre-let to UBS.

The net result of all these movements was that net asset value (NAV) remained flat at 596p a share (from 595p on 31 March). Unlike arch-rival Land Securities (LAND), however, British Land did manage to grow its rental income even as it sacrificed capital for development - underlying pre-tax profits increased by 3.8 per cent to £137m.

UBS expects adjusted NAV to rise to 606p by the period end.

BRITISH LAND (BLND)

ORD PRICE:520pMARKET VALUE:£4.7bn
TOUCH:519-520p12-MONTH HIGH:555pLOW: 443p
DIVIDEND YIELD:5.1%TRADING PROPERTIES:£49m
DISCOUNT TO NAV:9%
INVESTMENT PROPERTIES:£7.74bn*NET DEBT:94%*

Half-year to 30 SepNet asset value (p)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201157033137.413.0
201257210912.613.2
% change+0-67-66+2

Ex-div: 9 Jan

Payment: 15 Feb

*Including share of joint ventures