British Land reports 11% fall in portfolio value

Posted under General by Alan

British Land, which owns office and business park developments and retail across the UK, reported 10.8% drop in portfolio valuation in six months to September 2008. Its offices in City of London, which constitute 29% of British Land’s portfolio, fell by 14.1%.

The UK’s second-largest real estate trust has stakes in Songbird Estates Plc and owns 11% in Canary Wharf. The demise of its tenants including Lehman Brothers, led to 40% fall in the value of stake.

British Land suffered pre-tax loss of £1.33bn by end of second quarter including write down, but had surplus of £144m after stripping these out. Its chairman, Chris Gibson Smith, claimed that company has performed well in spite of higher stress in markets.

Smith added that although results were reflecting softening in yields, company’s long leases, higher occupancy levels and vast diversity of industries and tenants, provided cash-flow security. The group’s office-development activities would come to a halt until market conditions become more favourable.

Rental growth is likely to suffer in short term due to downturn in retailers’ trading, although there were no significant defaults in case of British Land tenants.

Chief executive, Stephen Hester, left British Land in October to join Royal Bank of Scotland as new chief executive. The successor is likely to be appointed by Christmas.

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