British Land's share price fell in morning trading after the company posted a loss due to the Brexit vote hitting UK commercial property prices.
The company behind the "Cheesegrater" announced a loss of £205m in the six months to the end of October as compared to the same period last year, down from £823m last year.
This was due to a 2.8 per cent fall in net asset values. At time of writing, the company's share price was down 2.47 per cent.
16 November 2016 @ 9:45amBritish Land Co (BLND)
Underlying profit, which does not take property values into account, increased 16.4 per cent to £199m. The company increased its dividend three per cent to 7.3p for the quarter.
Why it's interesting
It seems the effect of the Brexit vote is starting to feed through for commercial property companies.
Immediately after the EU referendum, investors rushed to take money out of commercial property funds, fearing for the City of London's future after the vote.
Many of the property funds have now re-opened, but as British Land's results show, commercial property values have softened - even before the Brexit negotiations have started.
What analysts said
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said that the company's fortunes will "track those of London" and that the value of office space in the capital will depend on how the Brexit negotiations impact the financial services sector.
For those interested in the rental income British Land’s top quality assets can generate there is plenty of good news - dividends are up, estimated rental values are up and leases and occupancy remain long and high.
However, if you were more interested in potential capital gains to be made on the company’s exclusive central London portfolio, things are not going so well, with net asset values down, particularly in the London office portfolio.
What British Land said
Chris Grigg, British Land's chief executive said: "We're mindful of future uncertainty but are confident that our secure income streams and strong finances will ensure our business remains resilient. As occupiers become more discerning we expect our high quality portfolio to benefit from increasing polarisation.
"The evolving environment will be reflected in our tactical decisions, particularly on development where we expect to proceed more cautiously. We have modest speculative development commitments currently, even following our decision to redevelop 100 Liverpool Street. This is a great example of the opportunities within our portfolio which provide a source of future value."