British Land confirmed two new lettings and announced a change of auditor in a trading update for a “strong” third quarter.
The REIT and its joint venture partner, Oxford Properties, have confirmed the first single-floor prelet at its city tower, the Leadenhall Building , EC3, to Australian serviced office business, Servcorp , as revealed by Estates Gazette.
The Sydney-based firm will occupy 11,9000 sq ft level 30, paying £72.50 per sq ft for a 15-year term with a 10-year tenant break option.
Servcorp has been given an initial rent-free period of 24 months, with six months if the break option is not exercised.
BL said the building, known as the Cheesegrater, was on track for completion in June 2014.
It also announced it has let 25,208 sq ft over three floors at its completed office development 10 Brock Street, at Regent’s Place NW1, to Santander Asset Management.
No terms of the letting were announced but other tenants in the office, which include Facebook, Debenhams and Manchester City Football Club, are understood to pay rents of circa £60 sq ft.
Knight Frank and CBRE advised BL; Jones Lang LaSalle advised Santander Asset Management.
On a change of auditor, the firm said following a competitive tender process it had recommended replacing Deloitte with PwC for the financial year starting on 1 April 2014.
In 2012 shareholder advisory group Pirc had raised concerns over the independence of the accountancy giant. It questioned the level of non-audit fees BL paid its property arm, Drivers Jonas Deloitte, for advice on the £1.6bn Meadowhall shopping centre.
The appointment is subject to shareholder approval at the AGM.
Looking at its performance over the three months to the end of December, BL said that like-for-like occupancy across its office and retail portfolio was up by 30 bps to 97.1%.
It added that overall occupancy, including recently completed developments, was 96.5%.
During the period it completed 525,000 sq ft of lettings and renewals with investment lettings and renewals coming in at 5.3% ahead of ERV.
Retail lettings and renewals totaled 386,000 sq ft, driving UK retail occupancy up by 40 bps to 98.4%.
Office lettings and renewals were 139,000 sq ft “with encouraging interest from a broad range of new and existing occupiers”.
During the period the REIT said it was “continuing to take advantage of investment market strength to reposition retail portfolio”, concluding £405m of sales since the end of the half year.
This includes the sale of Eastgate Shopping Centre Basildon for £89m, ahead of valuation.
It added that its had £200m of further disposals under offer or in the market, and has completed or exchanged on £196m of acquisitions since the end of the half year, including an £83m acquisition of a reversionary “zero coupon” investment in Sainsbury superstores in respect of which Cushman & Wakefield Corporate Finance advised the vendors..
Updating on its development programme, BL said its 2010 London programme was 70% prelet or under offer with nearly 80% of the residential units sold or pre-sold by value, delivering residential profit on cost of more than 30%.
These include 100,000 sq ft mixed-use Marble Arch House , which was completed in November, while it remains on site at the 193,500 sq ft residential scheme at Clarges Estate and its £90m residential scheme The Hempel, W2.
Looking ahead, it is progressing near-term pipeline with initial design and master planning underway at 4 and 5 Kingdom Street, Paddington Central and feasibility studies ongoing at its Shoreditch Estate with a planning submission expected in autumn 2014.
The group added its financial position remains strong with a consolidated LTV of 41.8%, as it confirmed a third quarter dividend of 6.75p – 2.3% ahead of the previous year.
Chief executive Chris Grigg said: “We have had a good third quarter and the business is performing well. Overall, the UK property market had a strong quarter with London, strengthening further and domestic and international investment spreading out into the regional markets. We continued to take advantage of the increase in investor demand to sell selected assets. At the same time, we have continued to leverage our deal and property skills to secure value-accretive transactions.
“From an occupational perspective, we saw increased interest in our office space in London, notably in the City. In retail, the economic recovery is having a positive impact on confidence and we continued to benefit from retailers looking to take space in the best-quality locations.
“We are moving forward with our new development programme, including starting on site at Clarges, and are successfully completing our 2010 development projects. Finally, we were very pleased to establish a new joint venture at Broadgate with GIC and have already started working with them to deliver our exciting vision for the estate.”
bridget.oconnell@estatesgazette.com
