20 November 2024
If you are covering British Land's half year results, please see the following comment from Oli Creasey, property research analyst at Quilter Cheviot:
“British Land, the diversified UK REIT, reported its half year results this morning. Following on from a relatively positive message delivered last week by close peer LandSec, British Land’s results are a little underwhelming and present a more missed performance.
“As expected, the company’s retail assets have performed well. British Land is focused on out-of-town retail parks, one of UK property’s top-performing sectors this year, and the company’s performance is unsurprisingly strong. However, its central London campus portfolio is still struggling. The valuation move which has seen a fall of 1.6% in the half year is not enormous, but is behind the equivalent figure reported by LandSec, and behind recent analyst expectations.
"Most of the pain has been felt by development assets, which are always more prone to sharp valuation moves. British Land has a large development project at Canada Water in central London, as well as a number of urban logistics projects throughout the capital, and performance of these assets has been weak, down 3% over six months. This comes as a surprise, particularly as logistics has been a rebounding sector so far in 2024, and British Land will be disappointed to not have participated in that recovery, citing slow leasing volumes in central London as a key factor. Logistics has long been a darling sub-sector for UK property investors, and observers will be looking for read across to other portfolios, although the specific nature of British Land’s central London developments make this a tricky exercise.
"British Land has been one of the better-performing REITs so far in 2024, but today’s results are likely to give investors pause. Comparisons to LandSec are inevitable for the company, and not favourable this time around. However, we do note that the opposite was true six months ago, and perhaps today’s news is simply a reversion to mean."
