British Land expects its development pipeline to be the catalyst for growth over the next few years as a pinch in real estate supply takes effect.
In annual results released today, the company said its central London office campus portfolio, which includes Broadgate in the City, was at an inflection point with valuations in the second half of the year (to 31 March 2025) up 0.8% (compared to a fall of 1.7% in the first half).
The company said that it was committed to 3m sq ft of “best-in-class” campus developments in core central London locations – HQ space next to key transport infrastructure.
It added that demand for this type of office space was picking up with the number of active requirements over 100,000 sq ft in central London reaching a record high of 36 at the end of March 2025. This together with a tight supply picture was resulting in very strong rental growth, it added.
It expects developments to add 4p to underlying earnings per share in its financial year 2027, and around 3%-6% per annum growth in subsequent years.
EPRA net tangible assets (NTA) was up 1% to 567p in the year to 31 March 2025, with its portfolio value up 1.6% (H1: +0.2% vs H2: +1.5%), driven by its retail parks portfolio (+7.1%).
Underlying earnings per share was flat at 28.5p as was the dividend at 22.8p.
LTV rose slightly to 38.1% (2024: 37.3%), after £2.2bn of financing activity in the year, of which £1.3bn of new finance was raised. The company has £1.8bn of undrawn facilities and cash, with no requirement to refinance until late 2028.
Operational highlights
- Portfolio occupancy 98%: Campuses 97%, Retail & London Urban Logistics 99%
- Leased 3.3m sq ft, 8.6% ahead of ERV with 0.9m sq ft under offer, 15.0% ahead of ERV
- Campus leasing: 1.5m sq ft, 7.5% ahead of ERV, with 0.3m sq ft under offer, 9.2% ahead of ERV and as at 16 May 2025, a further 1.7m sq ft in negotiations
- Retail & London Urban Logistics leasing: 1.8m sq ft, 10.5% ahead of ERV and 0.6m sq ft under offer, 18.4% ahead of ERV
- Like-for-like net rental growth +3%: Campuses+2%, Retail & London Urban Logistics +5%
Simon Carter, Chief Executive Officer said: “I am pleased with our strong operational and financial performance this year. We continue to lease space at rents significantly ahead of valuers’ expectations which, combined with good cost control and successful asset management, means we have maintained our underlying earnings per share, despite significant development activity which will be a key driver of future earnings growth. Values increased 1.6%, with a particularly strong performance from retail parks, up 7.1% and campuses returned to growth in the second half of the year, increasing by 0.8%.”
“The continued occupational strength of our key markets and the resulting above inflation rental growth gives us confidence for the future and in our strategy, despite ongoing macro volatility. Return to the office is in full swing, with mid-week occupancy back to pre-pandemic levels, and value and multi-channel retailers are competing aggressively for space on our retail parks. This, combined with the acute lack of supply in both these markets is resulting in strong rental tension, which will translate into future earnings growth and underpins our guidance of 3-5% per annum rental growth across the portfolio.”
