ii view: tech tenants give British Land a boost

First-half trading update to 30 September

• Expects adjusted profit up 8.4% to £155 million
• Portfolio value up 1.2%
• Expects a net tangible asset value (EPRA) up 2% to 579p per share

Guidance:

• Now expects full-year adjusted earnings of at least 28.5p
• Expects growth in full year 2027 adjusted earnings of at least 6% 

Chief executive Simon Carter said:

"Occupational fundamentals continue to favour our prime London office campuses and retail parks. Office attendance is accelerating, retailers are expanding out of town, and supply remains very constrained across both markets. 

“We are taking advantage of these positive trends through proactive asset management and development.”

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ii round-up:

British Land Co (LSE:BLND) today flagged an expected increase in first-half profit to late September, with the owner of properties including London offices and out-of-town retail parks also raising its full-year profit forecast.

A 1.2% increase in property values and a 4% increase in rents feed into an expected first-half adjusted profit of £155 million, up from last year’s £143 million. Annual adjusted earnings to late March 2026 are now expected to at least match last year’s 28.5p per share, up from a prior broadly flat estimate, with earnings for 2027 now guided to grow by at least 6%.  

Shares in the FTSE 250 Real Estate Investment Trust (REIT) rose 5% in UK trading having come into this latest news little changed year-to-date. The FTSE 250 is up almost 7% so far in 2025. Rival Land Securities Group (LSE:LAND) is up 4% during that time.

British Land properties include office developments in the City of London, Euston and Paddington, retail shopping parks and logistical warehouses on the outskirts of London, as well as the ongoing development of up to 4,000 homes at Canada Water in London. 

There’s also greater take-up of space from AI businesses across London, with 11 of them signing leases with British Land since April. It’s also busy at the Regent's Place science and technology campus, while the 1 Triton Square innovation scheme launches today.

Occupancy rates for the group’s nationwide retail parks, encompassing 1,200 store units, remain almost full at 99%. Rates for its London office mixed development campus outlets, and following a summer of elevated activity, are up 5% from a year ago to 88%. 

Recently completed London office development, Norton Folgate, and residential units to rent at London Aldgate are both now 80% leased, with management expecting both to be fully let by year-end. 

An expected net tangible asset value (EPRA) of 579p per share as of 30 September is up 2% from late March. First-half results are scheduled for 19 November. 

ii view:

Started in 1856, British Land today manages a portfolio valued at £14.6 billion as of late March with its own share worth £9.5 billion. Retail parks and logistical warehouses generated most profits during 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, a more uncertain global interest rate outlook following the imposing of potentially inflation boosting US trade tariffs, should not be ignored. A ratio of group net debt to adjusted profit of eight times, as of late March, warrants consideration. A move into residential rental properties now sees it competing against Berkeley Group Holdings (The) (LSE:BKG) and Grainger (LSE:GRI), 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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More favourably, the share price continues to trade at a discount to the net asset value of 579p per share. Occupancy levels across the group’s portfolio remain robust, with almost all of its unlet office space recently built or refurbished. A focus on life science and tech tenants for its offices likely differentiates it from rivals, while no requirement for refinancing until late 2028 was previously highlighted.  

On balance, and despite ongoing risks, a discounted valuation and forecast dividend yield of over 6% appear to offer grounds for long-term hope. 

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