Despite profit drop, British Land says retail assets strong

For the year to March 31, 2018, British Land Company Plc reported EPRA NAV 967 pence, up 5.7 percent; valuation up 2.2 percent with buyback contributing 15 pence. Underlying profit of 380 million pounds (510.5 million dollars), was down 2.6 percent following 1.5 billion pounds (2 billion dollars) net sales of income producing assets, in the last two financial years. The company’s full year dividend of 30.08 pence, was up 3 percent with a payout ratio of 80 percent. The company declared a final dividend of 7.52 pence.

Commenting on the full year trading, Chris Grigg, the company’s CEO said in a statement: “This has been another good year for British Land. In retail, we remained focused on delivering best-in-class customer service and the highest quality modern space, and this drove another year of good leasing and operational outperformance. We completed over 1 billion pounds of sales in the year and continued to make smart use of our capital. Looking forward, in retail, market conditions are likely to remain challenging.”

Highlights of British Land’s full year results

In retail, values were up 0.3 percent, with positive ERV growth offsetting yield expansion. Leasing activity covered 1.2 million sq. ft. generating 7 million pounds (9.4 million dollars) in additional rent, with incentives unchanged. At 98 percent occupancy, the company said, its portfolio is effectively full and is outperforming benchmarks on both footfall and sales.

British Land added that as online retail grows, many operators are evolving their models to focus on the optimal size, shape and nature of their physical store network. This year, these challenges were compounded by short-term trading headwinds, and several highly leveraged operators with challenged models applied for company voluntary arrangements (CVAs). Recognising this trend, the company said, for a number of years it has been actively repositioning the portfolio.

The company has sold 2.3 billion pounds (3 billion dollars) of retail assets over the last four years, including 419 million pounds (562.6 million dollars) this year. The company made acquisitions in Woolwich, south east London and in Ealing, adjacent to its existing Ealing Broadway shopping centre and completed the 60 million pounds (80.5 million dollars) refurbishment of Meadowhall.

Picture credit:British Land image gallery