The UK’s two biggest REITs released very different annual results this week but both significantly underperformed the IPD property index.
Landsec delivered a total return of 4.3% while British Land returned 7%, against the IPD average of 10.1% for the year to March 2018.
Landsec saw the value of its portfolio decline by 2% and posted a £251m loss.
Chief executive Rob Noel said the company had “worked on both sides of our balance sheet during the year, returning £475m to shareholders and refinancing over £1.5bn of our bonds, which reduced our weighted average cost of debt to 2.6% and lengthened its duration to 13.1 years”.
He said it was the cost of this refinancing that “was behind both our loss for the year of £251m and the slight reduction in adjusted diluted net asset value per share”.
After taking into account capex of properties held at the balance sheet date, including developments, purchases and sales, British Land reported a 2.2% increase in the value of its portfolio. Its pre-tax profits were up to £501m.
Chief executive Chris Grigg said it was “another good year”, adding: “As the ways in which businesses and people use space evolves, our strong and flexible balance sheet means we can capitalise on the opportunities we have created, which broaden the type of space we offer and further enhance the mix of uses and occupiers at our places to deliver enduring growth and returns.”
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