British Land has said that more than £1.1bn has been wiped off the overall value of its portfolio, as disruption from the coronavirus pandemic continues to put retailers under pressure.
The landlord’s portfolio value was marked down by 10.1% to just over £11.1bn during the year ending 31 March. The value of its retail properties was down by 26.1% to £3.9bn; however, offices inched up by 2.3% to £6.8bn, and developments grew by 6.5% to £1.1bn.
British Land’s 53-acre Canada Water scheme was highlighted as a standout performer in this regard, with its value increasing by 9.8% after receiving a resolution to grant planning permission.
The landlord said it could withstand a further 45% valuation decline before breaching its debt covenants, and that there was no requirement to refinance until 2024.
Its loan-to-value ratio stands at 34%. The REIT made £296m of retail disposals during the year.
EPRA net asset value per share declined by 14.5% to 774p. Net rental income fell by 10.1% year-on-year to £478m.
The landlord collected 68% of rent originally due for the March quarter, 97% of which was for offices and 43% for retail.
Chief executive Chris Grigg said he expected major trends to accelerate, including the shift to online retail.
“In retail, given current valuations and the lack of liquidity in the investment market, our focus is on delivering value though asset management, working to keep our places full and exploiting demand for assets which support an online offer,” he said.
Grigg also outlined targets to achieve a net-zero-carbon portfolio by 2030. This will include the creation of a transition fund, resourced by an internal carbon fee at £60 per tonne levied on new developments, to finance the retrofitting of its standing portfolio.
Grigg said he expected demand for the company’s offices, all of which are in London, to “further polarise towards safe, modern, sustainable and well located workspace.”
He added: “Near term, we are expecting the offices market to be more cautious, but we continue to conduct virtual viewings and are encouraged by negotiations we are having.”
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