ii view: high yielder British Land receives further AI boost

Full-year trading update to 31 March

• Now expects annual adjusted earnings per share (EPS) of 28.9p, up from a previous 28.5p per share
• A net tangible asset value (EPRA) of 590p per share, up from 567p the year before
• Like-for-like net rental growth of 6%

Guidance:

• Now expects 2027 adjusted EPS of at least 30.5p, up from 30.2p
• Reiterates expectation for 3-6% per year EPS growth over the medium term

Chief executive Simon Carter said:

"This has been an excellent year of leasing, reflecting our market-leading position in campuses and retail parks, where availability for high-quality space in the right locations is near record lows, and occupational fundamentals continue to strengthen, despite ongoing macroeconomic volatility.”

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ii round-up:

British Land Co (LSE:BLND) today upgraded profit forecasts, driven by a recent acquisition and demand from AI tech companies for the property owner’s office lets within its mixed-use campus developments.

New leasing of 3.8 million square feet across its largely campus and retail buildings along with a 6% increase in like-for-like rental payments, is now expected to contribute towards full year 2025/2026 adjusted earnings of 28.9p - up from a previous estimate of 28.5p. 

The company said it has recently signed a sixth deal with AI industry star Anthropic, this time for 158,000 square feet of space. They join occupiers including Gilead Sciences, global pharmaceutical, robotics, AI and tech companies at British Land’s One Triton Square campus near King’s Cross.

The completed £150 million purchase of Life Sciences Real Estate Investment Trust (REIT) is also expected to be earnings accretive, helping generate 2026/2027 earnings of at least 30.5p per share compared with management’s previous forecast of 30.2p.

Shares in the FTSE 100 company rose 3% in UK trading having come into this latest news down by a similar amount so far in 2026. That’s similar to rival Land Securities Group (LSE:LAND). The FTSE 100 index is up 6% year-to-date.  

British Land properties include campuses and office developments across central London, out-of-town retail shopping parks across the UK, as well as logistical warehouses on the outskirts of London.

Occupancy rates of 91% for its campus developments sat alongside a rate of 96% for its retail and London logistical lets. 

A net tangible asset value (EPRA) of 590p per share as of late March is up from 567p a year ago, pushed by 6.5% value increases for campuses and 4.4% gains for retail parks. 

Full-year results to 31 March are scheduled for 20 May. 

ii view:

Started in 1856, British Land today manages a portfolio valued at £15.2 billion as of late September, with its own share worth £9.8 billion. Retail parks and logistical warehouses generated most profit in 2024 at close to three-fifths, with mixed office development, or campuses the balance. Headquartered in London, the group estimates that it owns around 8% of UK retail parks.

For investors, soaring energy costs following the war in the Middle East and the potential impact on inflation, interest rates and the success of its own business tenants is not the be overlooked. Potentially higher for longer interest rates could impact British Land’s own financing costs. A ratio of group net debt to adjusted profit of eight times as of late March 2025 warrants consideration, while a relatively recent move into urban logistical developments leaves it up against established players Segro (LSE:SGRO) and Tritax Big Box Ord (LSE:BBOX).

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On the upside, the share price continues to trade at a discount to net asset value of 590p per share. Occupancy levels across the group’s portfolio remain robust. The acquisition of the Life Sciences REIT strengthens its existing focus on life sciences and tech tenants as well as differentiating it from rivals, while there's no requirement for refinancing until 2028.  

For now, and despite ongoing risks, a discounted valuation and a forecast dividend yield of close to 6% appear to offer reasons for longer-term optimism. 

Positives: 

• A diversity of property types 
• Attractive dividend yield (not guaranteed)

Negatives:

• Uncertain economic outlook
• Elevated net debt to adjusted profit ratio

The average rating of stock market analysts:

Buy