British Land unveiled a 1.9 per cent increase in annual underlying pre-tax profit to 274m pounds, driven by the strong performance of property assets.
The real estate investment trust saw the value of its portfolio rise 0.5% to £10.5bn over the year ended March 31st 2013 as demand for pre-lets and new developments offset an outward yield shift in retail.
UK retail values continued to decline as the market was constrained by consumer spending and growth in online sales.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
In order to address the issue, the company agreed a long-term partnership with BT to extend free wi-fi across UK shopping centres and outdoor shopping parks.
In offices, the valuation uplift was 5.0% ahead, boosted by the group's development pipeline, lease extensions and new lettings within the investment portfolio
Net asset value was up 2.0% to 596p per share as asset management initiatives and robust development performance counteracted the effects of equity placing.
A final dividend of 6.6p was proposed, bringing the dividend for the full year to 26.4p, an increase of 1.1%.
"While the UK property market overall remained tough, there was real divergence in performance which played to our strengths and favoured our portfolio," said Chief Executive Chris Grigg.
"Higher quality properties continued to be resilient and London remained relatively strong across all sectors - offices, retail and residential - with strong levels of interest from international investors. Despite a tough occupational market in retail, there was an improvement in investment sentiment for more prime shopping centres and retail parks in the second half."
Properties generated total returns of 6.3%, significantly outperforming the Investment Property Databank (IPD) benchmark on total and capital returns by 310 basis points and 360 basis points respectively.
The group signed 2.0m square feet (sq ft) of lettings and lease extensions with investment lettings signed on average 7.6% ahead of estimated rental value (ERV) with high levels of activity in retail and offices despite slower occupational markets. Occupancy in the UK came to 97.1% at the end of the year, 70 basis points lower on a like-for-like basis including adjusting for the sale of Ropemaker and the completion of 199 Bishopsgate.
Grigg said British Land remains cautious of the economic environment but believes the core business will be resilient as it focuses on better performing markets in London and the South East.
"In addition, ongoing recycling, notably our recent sale of Ropemaker Place, along with our successful equity placing increases our capacity to take advantage of a pipeline of attractive investment opportunities while completing our current development programme and staying comfortably within our stated gearing range," he said.
"We have already made good progress investing our placing capacity and we are pleased with progress on current opportunities under review."
Since the beginning of the year, the company has raised £1.7bn of finance including a £493m equity placing, a £400m convertible bond with a coupon of 1.5% and a £290m revolving credit facility.
December 2023 NS&I Premium Bond winners - check now to see what you’ve won
If you hold money in NS&I Premium Bonds, you can check from today (2 December) to see if you have won in the December prize draw. Here’s how to check.
By Vaishali Varu Published
OpenAI – corporate drama unleashed
OpenAI, the firm behind ChatGPT, was in uproar as its boss was booted out, briefly snapped up by Microsoft and then brought back again.
By Dr Matthew Partridge Published