British Land adds to retail portfolio
What makes a good retail asset? British Land’s head of retail Charles Maudsley says the factors are “dominance of the local area; extensive catchment; accessibility for shoppers; affordable rents; and attractive unit configurations”. The group this week found all those attributes in the Green Lanes shopping centre in Barnstaple, which it has bought for £30m. This is the second shopping centre it has bought in the past three months – it recently acquired the Drake Circus centre in Plymouth for £240m.
Green Lanes has 131,000 sq ft of retail space and attracts nearly 5.5m visitors a year, British Land said. The group noted that the purchase price represents an attractive net initial yield of over 8%, with the scheme historically trading at investment yields as low as 5.5%.
The group also announced it had received planning permission for its proposed refurbishment of 199 Bishopsgate in the City of London. The project, a joint venture with Blackstone, is due to complete at the end of 2012 and will provide 142,000 sq ft of office space.
The news came as British Land reported a 4.4% increase in NAV to 548p in the three months to 31 December, making 25% growth over 12 months. The group’s portfolio was valued at £9.3bn, up 2.3% for the third quarter and 13.1% ahead on a 12-month basis. British Land focuses on high-quality retail and central London offices and expects the underlying demand dynamics to remain positive for those sectors, despite its expectations of a muted recovery in the overall UK economy.
The group said investment activity had increased in recent months, as it had expected, with a greater number of attractive opportunities coming onto the market, “particularly good secondary property and assets which require combinations of development, re-financing and restructuring”. Prices are now more realistic than they were for most of 2010, it noted.
