British Land sees rents holding up, Europe struggling

published 25 July 2012

Property company British Land says lettings generally are strong but its relatively minor European estate is struggling.

In the three months to the end of June British Land saw lettings and lease renewals worth £13.5m, leaving occupancy across the group at 98.1%.

British Land is split into two broad asset classes: office space and retail. Overall occupancy in retail is now at 98.5%, an increase of 0.2 percentage points on the previous quarter.

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The European estate, which British Land emphasises is only 3% of the net portfolio, is suffering as the economic picture on the continent "continues to deteriorate" with southern Europe unsurprisingly hit by administrations and the need to offer discounts.

The office portfolio is seeing occupancy at 98.1% with lease values 7.9% ahead of the so called estimated rental value - a way of measuring general rental values.

The trading update did not give a full portfolio valuation but the approximate total is £10.3bn, with retail worth £6.3bn and office space at £3.6bn with some "other" investments making up the difference.

In a separate announcement British Land says it has bought the Clarges Estate in Mayfair for £129.6m. The site is located on Piccadilly, overlooking Green Park, and is close to the Ritz hotel and Bond Street. The acquisition is expected to complete in November with the plan being to develop the properties into a "landmark mixed use scheme".

British Land shares were 1.14% up just after the open.