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British Land ups guidance amid pivot into retail parks

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Retail Parks have become a key growth area for British Land
Retail Parks have become a key growth area for British Land

Property giant British Land has upped expectations for the year as the group continues its push into retail parks.

In its half-year results for the six-month period to 30 September, which were published this morning, the real estate investment trust upped its outlook for earnings per share from 27.9p to 28.1p.

Meanwhile, the group’s EPRA Net Tangible Assets (NTA) per share rose one per cent to 567p. Its loan to value ratio rose to 38.7 per cent from 37.3 per cent.

Since its full-year results earlier this year, British Land has been “very active,” said Peel Hunt analyst Matthew Saperia, with £711m of retail park acquisitions and a successful placing of new shares, which raised £301m.

Just last month, the group dished out £441m for seven retail parks from Canadian investment giant Brookfield, which it credited for the increase in full-year guidance.

More generally, British Land has rapidly expanded its exposure to retail parks over the last three years. Retail park exposure has risen from 15 per cent of the portfolio to 32 per cent.

“With retail parks a conviction call for the REIT, these acquisitions take their holdings to almost a third of the whole portfolio,” added Saperia.

“This conviction is paying off, with retailers competing for cost-efficient out-of-town space to support their online operations,” said British Land chief executive Simon Carter.

“This is leading to strong rental growth and valuation uplifts which are outperforming all other subsectors.”

Underlying profit for the group rose by one per cent to £143m over the last six months, while its total accounting return sat at 2.8 per cent.

Retail parks contributed strongly to the growing value of its portfolio, pushing it up 5.1 per cent, in contrast to a 1.7 per cent fall in the value of its campus assets and 2.6 per cent fall in London Urban Logistics valuations.

“The super prime space we are developing on our campuses is benefiting from a significant imbalance between the demand and supply for new and substantially refurbished space, particularly in the City, where we estimate a shortfall of five million square feet over the next four years,” added Carter.

The company upped its dividend for the period by one per cent to 12.2p.