British Land's boss hails defensive properties

The boss of real estate investment trust British Land's hailed the stock's defensive properties as the group unveiled interim figures that showed the group making progress, despite the tough economic environment.

"Against the background of slowing economic growth and renewed concern about the Eurozone, our results demonstrate that British Land is highly defensive and well positioned in the near term," claimed the group's chief executive, Chris Grigg.

Net asset value per share on a European Public Real Estate Association (EPRA) basis at the end of September stood at 591p, up 12.6% from 525p at the end of September 2010.

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Underlying profit before tax edged up 3.9% to £132m from £127m the year before, while reported profit before tax inched higher to £331m from £321m last year.

Underlying earnings per share climbed 2.9% to 14.6p from 14.2p. As previously announced, the quarterly dividend has been maintained at 6.5p.

Net rental and related income (on a proportionally consolidated basis) was £269m for the half, 5.5% ahead of last year. Organic like-for-like rental growth was 1.1%, with Retail up 0.7% and Offices up 1.8%.

Estimated rental values (ERVs) for the portfolio rose by 1.3% over the half, ahead of the market's 0.3% increase.

"Demand for space across our UK [retail] portfolio remained robust throughout, with occupancy remaining strong at 98.3%. Our rental trends remained positive with ERV up by 0.5% and we agreed 527,300 sq ft of new lettings and renewals 5.4% ahead of ERV," Grigg revealed.

As for the Offices portfolio, the central London market continued to perform well, although occupational demand in the City - the capital's financial district - was subdued, with signs of weakening investor sentiment for secondary assets.

The valuation of the group's portfolio moved up 2.2% from a year earlier to £10.2bn, with the Offices estate increasing by 5.3% in value and the Retail portfolio rising 0.7%.

Though coping well enough, in Grigg's eyes, with the current subdued economic environment, the British Land boss said the group is well placed to grow and outperform in the future as the economy improves.

"Our portfolio is rack rented and will continue to benefit from polarisation in both the retail and office markets. At the same time, there is considerable unrealised value in our development programme, which is well underway. Our pre-let agreements with UBS, Debenhams and Aon, underline the enduring attractions of our developments," Grigg maintained.

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