British Land, the developer of the City's Cheesegrater skyscraper, has reported an 8.4 per cent jump in underlying profit before tax, to £297m, saying good portfolio decisions and improvements in the commercial property and investment markets have helped it power forward.
Full-year net asset value leapt 15.4 per cent, and its UK portfolio valuation rose 8.3 per cent over the year, with lettings and renewals 6.3 per cent ahead of estimated rental value. Leasing activity added around £24m of new rent.
A word of warning from chief executive Chris Grigg, though: that political risks “at home and abroad” could well have increased over the year and “may have an impact”.
The prospect of increasing interest rates, a looming general election and consequent investor reluctance and potential regulation do pose risks, the property investment company said. It also cites a slowdown in emerging markets as something it's keeping an eye on.
British Land says it’s well placed to take advantage of the growing demand in the capital for retail space, which is already driving growth:
In London, we see rental growth along with the letting up of completed development space being the key drivers of our Offices performance given yields have already compressed significantly.
In terms of acquisitions and development, it’s ploughed £1.3bn of investment into London and the South East.
Despite the market remaining “competitive”, Grigg is confident the firm can continue to deliver:
We expect to be more balanced in our acquisitions and disposals in the coming year. We will continue to take advantage of market strength to sell more mature retail assets and we have a number of assets under offer or in the market.
Yesterday, Numis reiterated its add rating on British Land’s stock. Jefferies has a hold rating on shares and Liberum Capital’s just downgraded their outlook to hold.