British Land beats banks’ expectations

BRITISH Land has boosted confidence in London’s “rocky” property market by delivering strong third quarter results.

In the final three months of 2009 the value of the developer’s assets in the City rose by 8.2 per cent to £2.46bn and its net asset value per share by 18 per cent to 438p – substantially outperforming banks predictions of 425p.

British Land currently has 250,000 sq ft under offer and Chris Grigg, chief executive, believes this will put the company in a prime position to take advantage of improved rental values in 2010.

The developer invested £128m in retail and commercial developments since September, including the acquisition of a 50 per cent interest in Surrey Quays Shopping Centre and Clifton Moore Retail Park.

“Our office portfolio is well positioned in the context of improved letting activity and, in particular, we currently have over 250,000 sq ft under offer terms ahead of valuation,” Grigg said.

The developer’s pre-tax profit fell to £58m, an improvement on the second quarter, but down from the £63m announced in the same period last year. Analysts said this was evidence of the underlying weaknesses that still exist in the market.

Many UK banks remain heavily exposed to the City’s commercial property market and a further dip in the economy could cause more loans to be written off.

Peter Damesick, head of UK research at CBRE said: “There are concerns for a double dip recession, if this happens we’ll see banks write off all loans gone bad.”

But British Land is confident that its strategy of long leases, high occupancy and minimal breaks would be enough to combat a double dip recession should it occur.

British Land is paying out a quarterly dividend of 6.5p.