Costs mount for British Land as high street retailers suffer
THE cost of restructuring deals with struggling retailers is beginning to mount for British Land, the property company, amid “challenging” conditions on the high street.
The business said that the cost of administrations and company voluntary arrangements (CVAS) since April 1 2017 had risen to 1.6pc of its total rent roll, up from 1pc in May. CVAS enable brands to renegotiate rents with landlords in order to stay afloat, and have recently been used by retailers including New Look, Carpetright and Mothercare.
“The retail market remains challenging,” British Land said yesterday. “The impact of long-term structural change driven by the internet is being compounded by short-term trading headwinds.” Despite the difficulties faced by retailers, British Land said its shopping centres, which include Meadowhall in Sheffield and Drake Circus in Plymouth, would continue to be successful because they are in prime locations and attract high-end tenants.
Chris Grigg, its chief executive, said he was not concerned about the company’s long-term income. “This tends to be a temporary phenomenon – when retailers leave we get the real estate back and we let it again relatively quickly,” he said. “It does have an impact on the rent but it’s not necessarily a permanent reduction.”
The company has been cutting its exposure to the retail sector in recent years by increasing its investments in offices and rental housing. “[The retail] part of our business will continue to fall,” Mr Grigg added.
In a trading update, British Land said it had made an “active start to the year”, leasing more office space to bring its portfolio to 98pc occupied. The company will pay an interim dividend for the last quarter of 7.75p per share, a 3pc increase on the same time last year.