22 May 2025
If you are covering British Land’s latest results, please see the following comment from Oli Creasey, head of property research at Quilter Cheviot:
British Land’s full year results to March 2025 show a year of two halves. While property values mostly fell in H1, with retail parks being the only exception, the portfolio returned to positive growth in H2, across almost all sectors. The only weak areas were the relatively small urban logistics portfolio and Canada Water development project. Particularly notable were the H2 revaluations of London Offices – City +1.8% / West End +0.4%, defying the outdated narrative that the office market is struggling. Year-on-year valuation movement of +1.6% may be small numbers, but investors will be happy just to see positive numbers after the difficult period endured by the property sector over the past three years.
The company has guided to rental growth of 3-5% per annum and added that the expectation is for total NAV-based returns to be 8-10% through the next property cycle. Given that is an average over several years, the upswing part of the cycle ought to provide higher than average returns.
Despite the strong outlook, the company has guided to flat EPS growth for full year 2025/26, which is some way below consensus expectations. While that may disappoint some investors, the rationale is that the company is prioritising investment in this early part of the cycle and deploying capital in development projects where management see the best returns. While it makes sense, it does require investors to be more patient.
