Commercial landlord British Land swung to a half-year profit on improved rent collection and higher value of its office spaces and retail parks.
Office property firms in the UK are gradually recovering after battling lower rental levels and steep decline in valuation in the wake of the pandemic, as people increasingly return to cities, while more spacious retail parks have benefited during the health crisis.
“Demand is firmly focused on the very best (office) space, with an emphasis on sustainability, wellness, shared and flexible space and excellent transport connections,” chief executive Simon Carter said in a statement.
The Broadgate Estate owner, which counts office space as its biggest segment, said a per-share measure that reflects the value of its buildings, EPRA Net Tangible Assets, rose 5.1 per cent to 681p, while overall portfolio valuation increased 2.9 per cent.
The company said rent collection at its retail portfolio was 96 per cent for the half-year period, while it was entirely collected for the office spaces.
The FTSE 100 firm said profit after tax came in at £8370m for the six months ended Sept. 30, from a loss of £730m a year earlier.
Richard Hunter, Head of Markets at interactive investor, commented: “As the property landscape evolves and with specific challenges in London, British Land is redesigning its portfolio to reflect the new environment.”
He continued that larger questions remain unanswered from the results.
Hunter said: “The first relates to the inexorable rise of online shopping, boosted further during the pandemic, and the scarring this may leave on physical shopping centres and, indeed, the high street in general in future years. In addition, the longer term impact of hybrid working is yet to wash through, with staff at some companies not returning to the office at all and others on a limited basis.”
“These shadows have forced a redefinition of British Land’s strategy and there are some encouraging signs that the group is beginning to move ahead of the curve.”
More to follow