I was asked this question a lot when I started covering the property sector. It always stumped me because the companies are so very similar. Both own a broad mixture of London offices, regional retail assets and West-End development sites dotted with luxury flats. Both are building highly conspicuous skyscrapers in the City's insurance district, both within 50:50 joint ventures and both due for completion in 2014. The obvious answer seemed that either would do.
Yet differences have since become apparent. Simplistically, Land Securities has a bias towards growth and British Land toward value. This is most obvious in their dividend payouts - at 4 per cent, British Land's yield is a full percentage point higher. Meanwhile, Land Securities has pinned its hopes on its London development pipeline, sacrificing short-term growth in rental profits in the process. It was rewarded last week by being able to announce stronger portfolio growth for the year to March 2013.
This difference appears to divide the City - but along rather unusual lines. When I asked a number of specialist fund managers which company they preferred, they all gave me the same answer - and for the same reason. They all favour Land Securities because its chief executive, Rob Noel, is a "hands-on real-estate man", as Alex Ross at Premier Asset Management puts it enthusiastically.
A surveyor by profession, Mr Noel spent seven years at sector darling Great Portland Estates before moving to Land Securities in 2010 as head of the London portfolio. He was promoted to the top job last year. His rival at British Land, Chris Grigg, is an ex-banker, having joined from Barclays at the start of 2009 (replacing Stephen Hester, who took on the thankless task of turning around Royal Bank of Scotland).
For specialist fund managers, this question of leadership is all-important. "They're such different companies if you take people into account," insists Gillian Tiltman - who holds Land Securities but not British Land in her fund, M&G Global Real Estate Securities. Another manager, who preferred to remain anonymous, admits his growth forecasts for the two companies are practically identical over the next year - but still prefers Land Securities.
The irony is that British Land used to be famous for its entrepreneurial management under Sir John Ritblat. Nothing was more entrepreneurial than Sir John's perfectly timed exit: after 36 years at the helm, he left British Land in 2006, selling the bulk of his shares very close to their peak for £56.6m. Land Securities under Francis Salway - a softly spoken former fund manager with an academic air who stepped down last year - seemed more managerial in style. The roles seem to have reversed.
Meanwhile, the stockbroking community largely prefers British Land. Of 22 City analysts, 10 currently rate British Land a buy, compared with seven for Land Securities. Even some of those who rate both a hold, such as Mike Burt at Espirito Santo, cite the sector-leading dividend yield as a reason to favour British Land.
Investors Chronicle has never subscribed to the cult of the chief executive, preferring to focus on companies that "a fool can run, because someday a fool will", as Warren Buffett memorably put it. We also have a bias towards value over growth and jam now over jam tomorrow. So it's perhaps not surprising that we have largely sided with the brokers in this debate.
We put British Land on our buy register last November at 520p, following a period of share price underperformance and a resilient set of interim results. The very strong stock market since, combined with the ongoing weakness of the retail sector, which accounts for 61 per cent of the company's portfolio, prompted us to move to a hold recommendation at 625p last week - a 20 per cent gain. This was a solid call in absolute terms and relative to the market, up 16 per cent over that period. But relative to Land Securities, also up 20 per cent, it was indifferent.
In truth, I find neither company attractive at today's giddy valuations. Land Securities' shares now trades on a 7 per cent premium to next year's book value, using a top-of-the-range forecast from Investec, while British Land trades on a 6 per cent premium. Such premia may well persist as long as monetary expansion depresses funding rates and forces investors to look for alternatives to bonds - which is why we rate both companies a hold. But in the absence of much portfolio growth, buying in at these levels looks speculative.
Fund managers have to invest in British Land or Land Securities, because they alone offer the liquidity needed to fill a big portfolio. But private investors have the privilege of being able to ignore them.
We recommend they do now. Better growth prospects can be found further down the capitalisation scale in specialist players such as Unite or Workspace. And there's no shortage of value in the bombed-out regional property markets, which investors can access through listed companies such as Hansteen (HSTN) and Development Securities (DSC). The latter's shares also trade on a 33 per cent discount to book value - a valuation anomaly so striking we have written up the full story in our tips of the week.
