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British Land NAV drops on retail woes

British Land NAV drops on retail woes – British Land has published results covering the year to the end of March 2019. Highlights are:

  • EPRA NAV down 6.4% at 905p, with buybacks contributing 10p
  • Portfolio value down 4.8%; Retail down 11.1%, Offices up 1.1% and developments up 10.8%
  • Underlying EPS down 6.7% to 34.9p due primarily to one off income (surrender premia) received last year and impact of asset sales; buying shares back at a discount contributed 1.2p
  • Like-for-like rental growth of GBP15m; more than offsetting the GBP14m impact of Retail CVAs
  • Full year dividend up 3.0% at 31p; proposed dividend increase of 3% for next year

Balance sheet

  • GBP1.5bn of asset sales, including GBP193.5m superstore portfolio announced post year end
  • GBP200m buyback completed, bringing cumulative buyback to GBP500m over the last two years – this will be extended by a further GBP125m
  • LTV at 28.1% (March 2018: 28.4%)
  • GBP1.4bn of new financing arranged; weighted average interest rate of 2.9%

Strategy/asset management

  • 1.1m sq ft of leasing activity generating GBP21m of future headline rents;
  • 97.7% occupancy
  • Attracting occupiers across a range of sectors including McCann, Peel Hunt, Milbank, Facebook
  • Lettings and renewals on the investment portfolio overall 1.2% ahead of ERV
  • Completed/committed developments generating GBP63m of future rent, 76% pre-let/under offer
  • 5.2m sq ft near and medium-term development pipeline
  • Speculative development exposure low at 2.3% of portfolio value
  • Storey (flexible workspace brand) operational across 141,000 sq ft; 90% let or under offer; further 161,000 sq ft identified


  • 1.6m sq ft of leasing activity; marginally ahead of ERV; 96.7% occupancy
  • total sales 160 bps (1.6%) ahead of industry benhcmarks; footfall 230 bps ahead
  • GBP646m off-strategy assets sold since April 2018, 2% ahead of book value
  • GBP16.9m annualised rent impact of CVAs & Admins over the last two years
  • 61 units subject to closure, of which 42 re-let or in negotiation

Canada Water

  • Planning application for Masterplan submitted
  • 53 acre mixed use regeneration scheme including plans for 3,000 homes
  • Further opportunities to progress residential schemes across portfolio

Extract from the chairman’s statement

Across our London business our leasing activity covered 1.1m sq ft of space, further de-risking our developments – which are now 76% pre-let or under offer and securing GBP48m pa future rental income. We again let space to a broad range of occupiers, reflecting the modern London economy and improving the diversity and quality of our rental income. Key lettings this year included global advertising agency McCann, Peel Hunt, Facebook and law firm Milbank and momentum remains good, we are currently in negotiations on a further 479,000 sq ft. The retail market remained challenging, but we continue to outperform footfall and sales benchmarks and our leasing performance was strong, at 1.6m sq ft. Retailers continue to face the challenge of fundamental structural change compounded this year by short-term operational headwinds. As a result, we have seen further CVAs and administrations from troubled operators and, although faring better than the market overall, we have not been immune; the annualised rental impact from CVA’s and administrations that have occurred over the last two years was GBP16.9m including GBP0.9m at properties which have subsequently been sold. We have been focused on mitigating this for some time. Of the GBP10.9m rent on stores subject to closure, GBP6.5m has already been let or is in negotiation.”

BLND : British Land NAV drops on retail woes

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