- Lettings and renewals 3.2% higher than ERV
- Office and retail markets both strengthening
- Q1 dividend confirmed up 2.5% at 6.92p
British Land reported a good start to the year as it continues to make the most of strong markets, with the occupational and investment markets in London and retail both strengthening.
The company is taking advantage of the strength of investment rental yields in retail to sell off some of their exposure.
Investment lettings and renewals were 3.2% ahead of estimated rental value (ERV) in the first quarter of the new financial year and 5.6% ahead in the office portfolio. The weighted average interest rate across the portfolio remains at 4.1%.
The real estate investment trust (REIT), which no longer provides full financials with its quarterly statements, confirmed the first quarter dividend would be 6.92p, 2.5% ahead of the prior year.
Chief Executive Chris Grigg said: "We've had a good start to our new financial year. The occupational and investment markets in London and retail continue to strengthen, while our own actions are also driving a strong performance."
The FTSE 100 group completed 112,000 square feet of office lettings and renewals, with Grigg saying the 2010 development programme is nearing completion with further lettings signed and pleasing levels of ongoing interest, giving the group confidence to push it new programme of developments. So far 78% of space from the 2010 programme has been let or is under offer.
In Retail, he revealed a range of attractive leasing deals were signed across the portfolio and the improving investment market has enabled management to continue to make selected retail disposals at prices ahead of valuation.
The group has been taking advantage of investment market strength in retail to continue reshaping the portfolio, with £115m of UK disposals since the start of the financial year. This included £57m of superstore sales, 7% ahead of valuation and 3 superstores sold at net initial yields of between 4.4% and 5.0%. The £72m sale of Leamington shopping park was 12% ahead of book value.
Broker Liberum said the retail disposals were "likely to be positively received by the market as a sign of both British Land's commitment to capital recycling, and pragmatism on the company's exposure to the superstore sector where asset performance is expected to become increasingly differentiated due to structural changes in consumer spending patterns".
Retail occupancy was up 10 basis points to 98.6% and retail footfall up 2.5% and continuing to way outperform a benchmark down 0.8%.
Retail analyst Nick Bubb noted: "British Land is the biggest single direct investor in retail parks and we attended a presentation yesterday evening by the property consultant Trevor Wood... which pointed out that the retail park market has been remarkably buoyant over the last year, despite the recent demise of Comet and many furniture chains, with mighty B&M and other discount outlets taking up much of the space."
British Land's financial position remains strong, with a proportionately consolidated net debt lower since the year end at £4.8bn as asset sales have outweigh acquisitions and development spend.
Shares in the company were strong performers in the morning session steadily climbing 2.53% to 709p by midday.