British Land have announced their annual results for the year ended 31 March 2016. During the year, the company says that underlying profit increased by 16.0% to £363m, whilst the company’s EPRA NAV increased by 10.9% to 919p per share (or 932p pre the budget stamp duty increase). The company generated an IFRS profit before tax of £1,331m, which was 25.6% down on the prior year (2014/15 £1,789m). The 2015 IFRS Profit before tax reflected a valuation uplift of £950m some 39.9% than in the prior year (2014/15 £1,582m). IFRS Net Assets were £9.6bn at 31 March 2016, an 11.6% increase year-on-year (2014/15 £8.6 bn). The final quarterly dividend has been increased by 2.5% to 7.09p (+2.5%), which brings the full year dividend to 28.36p (a 2.5% increase). The company says that a full year dividend of 29.20 pence per share is being proposed for the 2016/17 year with a 3.0% increase in the first quarter dividend to 7.30p.
In terms of performance drivers, the company says that Valuation performance was driven by improving ERV growth (ERV = estimated recovery value). Over the year, total portfolio valuation grew by 6.7% (standing investments grew by 6.4% and developments by 9.4%). The company says that the second half performance was driven by ERV growth with an accelerating trend compared to the first half and the prior year. The company says that Offices & Residential grew by 11.8%, whilst retail and leisure grew by 2.4%.
In terms of rental activity, the company says that its portfolio is now nearly fully let with 99% occupancy. During the period there were 1.3m square feet of lettings and renewals. Of this, 903k square feet was to retail occupiers (8.0% ahead of ERV) and there is a further 343k square feet under offer. They also say that footfall increased by 3.0%, outperforming the benchmark by 4.4% and retailer sales were up 2.4%. Office lettings and renewals totaled 296k square feet (5.6% ahead of ERV). The Leadenhall Building is now 98% let or under offer (2014/15 84%), whilst £3.8m of rent was added through rent reviews (a 17% increase over previous rents).
The company says that it is allocating capital into its London campuses and multi-let Retail assets. Net investment of £280m million into its London campuses, which included the acquisition of One Sheldon Square, the development of 4 Kingdom Street and public realm works at Paddington Central. I also reports the completion of its 5 Broadgate development and the completion of its 338 Euston Road refurbishment. For the multi-let Retail portfolio; 169,000 square feet of leisure extensions were completed at Whiteley and Glasgow Fort, whilst £420m of mature or non-core retail assets were disposed of including £122m of superstores.
In terms of its development pipeline, the company says that it has committed to speculative development of £530m (2.0 million square feet in its near term pipeline). It has also been granted planning permission on 100 Liverpool Street and 1 Finsbury Avenue for 823k square feet of redevelopment and has submitted a planning application for 550k square feet 2-3 Finsbury Avenue. Elsewhere, 168k square feet of leisure extensions have been consented at Drake Circus Shopping Centre, Plymouth and New Mersey Shopping Park, Speke
In terms of finance, the company says that its proportionately consolidated LTV has reduced to 32%. Furthermore, its proportionately consolidated WAIR has been reduced by 50 bps to 3.3%, which has been driven by increased proportion of floating rate debt, a £350m zero coupon convertible, a tender offer and the purchase of £110m of debentures.
British Land reports underlying profit growth of 16% : BLND