British Land posts £623m Q3 earnings

It is preparing to activate projects as market improves

British Land Co, the UK’s second-largest real estate investment trust, reported a third-quarter profit after commercial property values recovered.

Net income for the three months ended Dec 31 was £623 million (S$1.38 billion), or 72 pence a share, compared with a loss of £1.59 billion, or 257 pence, a year earlier, the company said in a statement on Tuesday. Net asset value rose 18 per cent to 438 pence per share.

British Land, which owns half of the Broadgate office complex in the City of London, has about £1 billion to invest after selling shares and assets.

The company is competing with other Reits and funds as a limited supply of available properties fuels price increases. Values fell by almost 50 per cent in the two years following the market’s mid-2007 peak.

‘The early signs of recovery seen in the second quarter extended right across our portfolio during the last three months of 2009,’ chief executive officer Chris Grigg said in the statement.

Rental income excluding sales and purchases grew 1.4 per cent in the quarter. Around 6 per cent of the company’s properties are vacant, according to the statement.

British Land said it’s seeking permission to redevelop two offices at Broadgate that it owns in a joint venture with Blackstone Group, according to the statement.

The company has more than 650,000 square feet of new London office space available to lease, and owns sites with potential for about four million square feet of development, said the statement.

The company is preparing to activate projects quickly as market conditions improve, it said on Tuesday.

British Land owns more than 20 million square feet of UK retail properties, specialising in large warehouses in suburban shopping parks for tenants including Currys, Next and Asda. It also owns about six million square feet of offices, with more than half located in the City of London financial district.

Average commercial property values in the United Kingdom have risen by about 9 per cent since hitting bottom in July, according to Investment Property Databank Ltd.

‘As the company has close ties with banks, we see a high chance of acquisitions coming through in 2010,’ Harm Meijer, a London-based analyst with JPMorgan Chase & Co, said in a Feb 2 note to investors. British Land may spend £500 million on properties this year, he estimated.

The company suspended most of its development programme because of the financial crisis, including the London skyscraper nicknamed the Cheesegrater that was to be the tallest building in the City.

British Land reported net income of £161 million for the three months through September 2009, after eight consecutive quarters of losses.

British Land advanced 8.2 pence, or 1.9 per cent, in London trading to 446.3 pence. The stock has gained 7.5 per cent in the last 12 months, giving the company a market value of £3.9 billion.

The value of British Land’s offices and retail parks increased 8.2 per cent to £7.9 billion, the company said.

Source : Business Times – 11 Feb 2010