British Land saw the value of its portfolio fall by £194m (2.5%) to £8,704m in its half-year results for the six months to the end of September.
The fall was largely due to the 4% decline in the value of British Land’s campuses, with the company’s retail parks (0.2%) and London urban logistics assets (0.6%) both recording increases in value.
The company reported underlying profit growth of 3.4% and said it was paying a divided per share of 12.16p – up 4.8%.
British Land added for the full-year 2024 it expected ERV growth would be at the top end of its previously guided ranges and it was “comfortable” with current market expectations for FY24 earnings.
Simon Carter (pictured), CEO of British Land, said: “We are pleased with the performance in the first half with underlying profits increasing 3% on the back of another strong period of leasing and good cost control. We have seen yields continue to move out, but as we predicted in May, at a slower pace. Rental growth has accelerated, with lettings 12% ahead of ERV, and occupancy remains strong at 96% well above levels in the wider market.
“We are benefitting from our decision to pursue a value-add strategy across campuses, retail parks and London urban logistics. These submarkets have the strongest occupational fundamentals and highest rental growth within the office, retail and logistics sectors. We now expect ERV growth at the top end of our previous guidance for FY24.
“Whilst in the past 18 months we have delivered good earnings growth, asset values have been impacted by the increase in interest rates. The geopolitical and economic landscape remains uncertain; however, with our portfolio yield now over 6% and an increased likelihood we are approaching the peak in UK base rates we expect the strong occupational fundamentals of our submarkets, together with the differentiated quality of our assets, to reassert themselves as the primary drivers of performance.”
