British Land boosted by bounce back in office lets

City A.M. Reporter
British Land said it had been boosted by an increase in occupancy rates in its buildings in the first half.

The landlord's Net Asset Value (NAV) rose 4.2 per cent to 525 pence a share in the six months to 30 September, against 504 pence at end-March 2010.

In the previous half-year period, its NAV was 372 pence a share, the company said in a statement.

"We've had a good start to the year with strong letting activity improving occupancy to 98 per cent and driving a further increase in (portfolio) valuation to £8.9bn ($14.2bn)," chief executive Chris Grigg said.

"Looking forward, we expect to be able to exploit the growing demand supply imbalance in London offices and to benefit from a growing need from a significant number of retailers to take new space in the best locations," Grigg said.

The company maintained its second-quarter dividend at 6.5 pence, contributing to a total first-half dividend of 13 pence a share, which was unchanged from the previous same period.

The 2.6 per cent rise in portfolio value was "broadly balanced between the first and second quarters," Grigg said.

"Overall, the portfolio modestly outperformed the IPD benchmark, driven by the combination of successful office lettings and our portfolio weighting towards prime London office and retail," he said.

The company's underlying first-half pre-tax profit was £127m, marginally down on the year earlier's pretax profit of 129 million pounds, which included a £16m credit provision release.

"The increase in underlying profits, excluding the provision release, was driven by new lettings and lower costs which more than offset the lost income from assets sold during 2009, principally Broadgate."

On November 12, British Land upped its bet on the prospects of the Square Mile financial district by unveiling a £35m ($57m) redevelopment of offices occupied by the Royal Bank of Scotland.

Last month, British Land teamed up with Canada's OMERS to develop the £340m, 610,000-square-foot Leadenhall Building nearby