The pandemic has wiped almost £1bn off commercial landlord British Land’s (BLND) portfolio after retailers were forced to close and offices lay empty.
The FTSE 100 firm said the value of its portfolio of offices and shops had fallen from £11.2bn in March to £10.3bn by the end of September.
The structural challenges in retail as firms move online paired with the forced closure of stores meant British Land’s retail portfolio was the biggest casualty, falling 14.9 per cent. The firm said over the period a further 16 of its occpiers have entered CVA or administration, accounting for 80 units.
British Land’s office portfolio was down 3.1 per cent as companies defer decisions and extend existing leases where they can. There are encouraging signs in London with increased interest from overseas investors that “are positive on London as a place to invest and the long-term role of offices.”
“Many of our customers have seen that their people can work more flexibly, but they are clear that great office space, such as we deliver at our mixed use campuses, will continue to play a crucial role in their success,” said incoming boss Simon Carter.
As a result the firm reported a near 30 per cent drop in underlying profit to £107m for the six months to 30 September, while losses after tax ballooned to £730m from £404m a year earlier.
British Land said it had collected 97 per cent of the £48m in rent it is owed from its office tenants in three months to September, but only 62 per cent from its retail customers.
Despite the challenging year British Land has resumed its dividend after suspending payments in March. The boar dhas declared an interim dividend of 8.4 pence per share, representing 80 per cent of underlying EPS.
“Like many businesses, we continue to face challenges as a result of Covid-19, but we also recognise the importance of the dividend to shareholders and our obligations as a REIT,” said outgoing chief executive Chris Grigg.
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“British Land itself is trying to get its house in order, to prepare for potentially long term changes to the way we use office and retail space in the future. Trying to second guess the extent to which pandemic habits will stick won’t be easy but it is becoming clear office space and how we shop is undergoing a major rethink,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
Shares are down 3.41 per cent.