British Land (BLND) optimistic despite uncertainties
By Rob Griffin
12:43, 17 November 2021

UK property developer British Land said there are plenty of reasons for positivity despite the ongoing uncertainties with rising input costs.
In a half-year update, it reported strong leasing activity, significantly improved rent collection and increasing values across campuses and retail parks had driven 6.1% total returns.
The FTSE 100 landlord delivered an underlying profit of £120m ($161m) in the six months to the end of September 2021, up 12.1% over the £107m in the same period last year.
Healthy pipeline
In a statement, chief executive Simon Carter announced that it had let a 254,000 sq ft space to law firm Allen & Overy post-period end.
He also said there was a “healthy pipeline of deals” under offer, reflecting renewed optimism in London offices with occupiers more confident in committing to space.
Matthew Saperia, an analyst at Peel Hunt, upgraded his recommendation to Add from Hold, as he branded it a “respectable” return.
“We are increasing our target price to 580p,” he said in a note.
However, British Land’s stock price had modestly fallen 0.4% to £5.31 by 11:00 on the London markets.
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Flexible working
Carter noted the trend toward flexible working had accelerated during Covid, with office demand “firmly polarising” toward the highest-quality, most sustainable space.
“This is exactly what we deliver at all our campuses, where we also benefit from strong demand from innovative growth sectors,” he said.
He also pointed out that the valuation decline had slowed within shopping centres, while the “value play opportunity” in retail parks was being driven by reducing yields and rent stabilisation.
Positive outlook
Carter noted uncertainties remained in the macro environment, particularly with respect to rising input costs, despite the economy continuing to recover.
“However, longer-term trends including the demand for high-quality workspace, omnichannel retail space and urban logistics in London positions us well for the future,” he said.
The market for urban logistics assets to support last-mile delivery in London remains excellent, he said, and the company expects continued strong rental growth with further yield compression possible.
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