British Land upbeat despite ‘age of austerity’
The UK’s consumers are still shopping and “good businesses are looking to grow,” said British Land chairman Chris Gibson-Smith yesterday, despite the “age of austerity” currently underway, as the group reported 6.9% growth in its portfolio to £9.6bn in the year to 31 March. NAV per share was up 12.5% at 567p and underlying profit was 9.9% ahead at £256m.
Chief executive Chris Grigg said rental values had risen by 2.7% across the portfolio, significantly outperforming the 0.1% increase in the IPD benchmark, as occupier demand continued for high-quality space in the right locations. “Leasing activity across the portfolio generated additional gross rental income of £14.2 million on an annualised basis with rents agreed at 2.0% ahead of estimated rental values (ERV),” he added.
Within the retail portfolio British Land said it was positioned to benefit from occupiers’ continued focus on having a smaller number of larger stores, located in the best-performing centres. Occupancy in the retail portfolio was 98.5% in the UK and 90.5% in Europe for the year, and the group’s rental values started to rise in the second half, with 0.7% growth for the full year. “This trend was mirrored in our letting activity with new lettings agreed at 1.8% ahead of ERV for the year as a whole and 6.8% ahead in the second half,” Grigg added.
The offices portfolio occupancy rose 5.2 points to 97.8% and rental values climbed by 7.7% – the group’s portfolio is focused on Central London, where demand is strong and availability limited. Leasing activity added rental income of £8.4m on an annualised basis, and included 270,000 sq ft of new lettings at 11.6% ahead of ERV, the group noted. British Land says it currently has the largest office development programme underway in the capital – it is committed to £1.6bn of schemes (of which its share is £1.1bn) that will deliver 2.2m sq ft of available office space between 2012 and 2014, in the City and the West End.
