British Land braced for life outside EU
Commercial property developer reports strong trading but warns of uncertainty after EU poll
BRITISH Land has warned of a “more cautious approach” from investors and tenants following the European Union referendum, but said it was in a “robust position”.
The commercial property giant’s chief executive Chris Grigg said in a trading statement for the three months to June 30 that the company had a “good quarter of activity in the lead-up to the referendum”, standing it in good stead for a more uncertain period ahead.
The FTSE 100 company’s shares plunged on the news that Britain had voted to leave the European Union, falling more than 34pc to £5 on the day the result was announced. Since then, its share price has recovered, closing yesterday at 628p, but continues to trade well below its pre-vote level of £7.62.
However, British Land has recently exchanged contracts on the sale of one of its biggest retail assets, Debenhams’ flagship store on Oxford Street, for £400m. The deal was one of the biggest since the vote.
It has also let the last of the office space in the Leadenhall Building, better known as the Cheesegrater, in the City of London, despite fears that companies would put off making decisions about where they would house their staff in the wake of a decision to leave the EU.
In terms of its retail space, the company said the sector was in good health, with both footfall and sales ahead of benchmarks. British Land currently owns and manages around £9.8bn of retail assets. British Land’s exposure to offices in the City of London and retail property let to single tenants means it is vulnerable to weakness in other sectors, analysts said yesterday.
“With demand uncertain and rising supply certain, the rental growth attraction for London offices is limited and a discount justified,” a note from Liberum said.
Mr Grigg said: “It is too early to properly assess the impact of the referendum result on the markets in which we operate but we do expect some occupiers and investors to take a more cautious approach.
“British Land has entered this period of post-referendum uncertainty in a robust position. We have a strong, resilient business with a clear strategy.”
The group will not need to refinance for four years, it said. It also confirmed a dividend for the first quarter of 7.3p, 3pc higher than the same period last year.
Elsewhere in the City, Wells Fargo has agreed to buy a newly built office building on the edge of the Square Mile for its own occupation, indicating that the appetite for investing in London offices has not entirely faded.
The bank has bought a building called 33 Central, on King William Street, from developer HB Reavis for around £300m. The building will become its new London headquarters.