British Land has posted a 4.5% rise in NAV to 623p a share driven by strong valuation gains in the half year.
The REIT’s best performing portfolio for the six months to the end of September was its 2m sq ft development pipeline, which increased in value by 8.9%.
This development uplift, plus a 2.1% increase in standing investments resulted in the company’s UK portfolio rising in value by 2.8% to £11.2bn.
BL said its £6.6bn UK retail portfolio rose in value by 1.5%, reversing the trend of the last 18 months, while its £4.4bn of offices delivered a 5% increase.
Underlying profit before tax was up 6.6% to £146m.
Over the period BL invested £1.2bn in development opportunities and buildings in its core markets in London and the South East.
This included the purchase of Paddington Central and the Shoreditch Estate, which add more than 700,000 sq ft to its near-term development pipeline.
It sold or exchanged on £190m of UK retail assets and reinvested £101m in Southgate, Bath.
It also disposed of its poorly performing Spanish retail investment, Puerto Venecia, reducing its European exposure to 1% of its total portfolio.
BL noted “increased leasing activity driven by stronger demand from broad range of high-quality occupiers” during the first half of the year, with investment lettings agreed at 5.4% ahead of ERV.
On retai,l it said demand was “broader and higher quality”, while investment lettings were 3.8% ahead of ERV and occupancy increased by 60bps to 98%.
BL said it is in a “strong financial position with continued access to low-cost finance”, having agreed £610m of low-cost new borrowings since the beginning of the year.
Its weighted average interest rate reduced from 4.6% to 4.2%, while its LTV rose marginally from 40.2% to 42.3%.
It declared a quarterly dividend of 6.75p, bringing the half year to 13.5p – up 2.3%.
Chief executive Chris Grigg said: “Our business is in good shape, as evidenced by our good first-half results, and we are executing smartly, with conviction and according to plan.
“We expect to benefit from the decisions we have made over the last few years to reshape our portfolio, which have increased our exposure to London and the South East; replenished our development pipeline and further focused our retail portfolio on the best locally dominant assets.
“All of these decisions have positioned us well both for stronger profit growth and total returns.”
bridget.o’connell@estatesgazette.com
