British Land (BLND) plans to spend up to £300m buying back its own shares, in a move indicating management frustration with the deep discount to net asset value the shares currently show. The buyback is also the result of continued strong demand in the investment market, which has made it more difficult to acquire assets offering an attractive return.
However, that strength has made it highly lucrative to dispose of certain assets. Since its full-year results were announced in May, British Land has sold off its share of the Leadenhall Building for £575m, while other disposals raised £135m, and there are further assets under offer worth £88m. During the three months to the end of June continued strong demand meant completed lettings and renewals reached a total 370,000 sq ft, 7.8 per cent ahead of estimated rental value. A further 870,000 sq ft is under offer. That included 310,000 sq ft of office space at 1 Triton Square, which the company will be committing £200m to develop. However, despite this and the share buyback, the disposal programme means there will not be any material change in the loan-to-value ratio.
At 1 Finsbury Avenue, which is part of the Broadgate Campus, work will start in August on a refurbishment programme at a cost to British Land of £35m. This will add more retail space, a new cinema and a roof terrace. And around 78,000 sq ft, or just over a quarter of the total, could be taken by technology company Mimecast, with exclusive discussions already under way. And at 2 Finsbury Avenue – as part of the first-phase roll-out of Storey – the flexible workspace brand, 25,000 sq ft has been leased to Kingfisher Digital. Despite the buyback programme, British Land retains significant resources to fund its pipeline of development opportunities.
