British Land eyes disposal of City assets

City A.M. Reporter
LONDON landlord British Land intends to sell assets in the City financial district as it takes a more trading-focused investment strategy, adding an uptick in its exposure to prime offices may not last long.

The company said yesterday its £1bn share in developing 2.1m square feet of prime offices in central London would see its portfolio exposure to the sector rise to about 40 per cent, from 33 per cent.

“We will be driven, to some extent, as we see opportunities going forward,” chief executive Chris Grigg said. “We would intend over time to be more trading orientated in the City, so in a way that you could see that (portfolio weighting) going up in the short term, but potentially down longer term as we seek to take advantage of the value we create by development.”

His comments came as British Land posted improved results for the six months to 30 September, with portfolio value, net asset value (NAV) and occupancy all rising, while the company’s interim dividend remained flat.

Collins Stewart analyst Nan Rogers kept her “Sell” rating and 450p price target on British Land, preferring Great Portland Estates and Land Securities for their higher exposure to London’s West End and better performance. British Land’s 2.6 per cent hike in portfolio value to £8.9bn was below the 7.3 per cent reported by Great Portland and 3.4 per cent booked by Land Securities. British Land’s net asset value rose 4.2 per cent to 525p a share in the six months to 30 September, against 504p at the end of March 2010. In the prior first-half period, its net asset value was 372p. Supply of new-build London offices is expected to undershoot demand in the next three years following a three-year hiatus in construction.