British Land will emerge from the pandemic intact despite collecting less than half the rent it is owed for December, according to a City analyst.
The London-based retail landlord is one of the UK’s most important players in property development and investment, managing a range of sites including Broadgate, Regent’s Place and Paddington Central.
The UK’s largest commercial landlords revealed today it has received just 46 per cent of rent owed by retailers, three-quarters of which were open in the four weeks leading up to Christmas.
Footfall across their retail assets between late November and Boxing Day was ahead of the UK average, equating to 76 percent of last year’s level.
Like-for-like sales at open stores were 81 percent of the same period last year, while open air retail parks have remained the strongest performers with 87 percent of last year’s footfall and 85 percent of last year’s sales.
Shares in the landlord are down 1.8 per cent today 428p per share.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, believes the quality of British Land’s services puts them in a stronger position than most to recover from the economic effects of Covid-19 but senses difficult times ahead.
Hyett said: “A shakeout in retail looks increasingly inevitable and that will be painful. Demand for retail space looks set to decline dramatically as a larger portion of sales shifts online.
“British Land’s higher quality assets may be better positioned to weather the storm than others, but the shift is still likely to mean years of disrupted rental collection and is probably bad news for property valuations.”
Following the new national lockdown, as of 7 January, 620 British Land stores can trade in some way, which is less than a third of their total outlets
Its office tenants have fared better throughout the pandemic, paying 95 per cent of total rent owed for the December quarter.
Hyett added: “In British Land’s favour is the fact its shopping centres are performing better than the wider market, helped by outdoor retail parks delivering click and collect services, while office rent is proving robust despite the fact many of us are working from home.
“These are long term positives, and together with newer campus developments in London should mean the group emerges from the crisis bruised but not broken.”