British Land has reported a loss after tax of nearly £1.1bn, while slashing £2bn off the value of its portfolio in the year ending March.
The landlord’s third consecutive annual loss was an improvement on last year, when it reported a loss after tax of just over £1.1bn.
Portfolio value shrank by 10.8% to £9.1bn during the period, with the fall led by its retail division. The value of its retail properties was down by 24.7%, while offices declined by 3.8%.
During the year the landlord sold £556m of retail assets and £643m of stand-alone offices.
EPRA net tangible assets per share dropped by 16.3%, to 648p. Underlying profit fell by 34.3% to £201m.
British Land said that it would “more actively” focus on investing in two strategic areas – campuses and retail and fulfilment. The latter initiative, which it set out last month, includes out-of-town retail parks and development-led investment in urban logistics in London.
Chief financial officer David Walker said it is primarily targeting last-mile urban logistics opportunities within the M25. “We think this is a newer, growing market,” he told EG.
“It is a bit less developed and a bit less competitive. More fundamentally, we are looking at development-led opportunities where we think we can drive the most value – whether to develop from scratch, or to acquire existing assets that we can [add to by] building up or building down underground.
“When we look across our existing portfolio, there are opportunities to do that already without the need to acquire.”
As part of its retail park investment strategy, the landlord is seeking to buy the remaining 22% interest in its 10 Hercules Unit Trust parks, worth around £150m.
Walker pointed to a “value opportunity” in retail parks, highlighting that rental values have remained broadly in line with those seen in March. “There could be another rental decline of 5% or so in the retail park side of the business, but if there are value opportunities to acquire, we will absolutely take them,” he said.
Walker also highlighted that retailers have indicated a preference for retail parks, such as M&S which today outlined plans to relocate some of its high street locations in core markets to retail parks.
On the whole, Walker said the leadership team is confident that British Land will “progress at pace”. The firm had £1.8bn cash in undrawn facilities and no requirement to refinance until 2025. Its loan-to-value has reduced by 200bps, standing at 32%.
Simon Carter, chief executive, said: “Looking forward, we will further align our business to growth and value, benefitting from the pick-up in economic activity that is now emerging. On our campuses, we have an opportunity to introduce innovative growth sectors, including life sciences at Regent’s Place.
“At Canada Water, our planning permission is deliberately flexible, enabling us to deliver a range of uses aligned to growth and long-term trends. In retail and fulfilment, we will continue to target value opportunities in retail parks and development-led, logistics in London.”
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