A warning that tenants and investors could be more cautious going forward sees commercial property giant British Land’s (BLND) shares remain flat at 627.7p, despite a positive first quarter.

The UK’s second largest real estate investment trust (REIT) by market cap is expected to suffer some impact from Brexit.

British Land focuses on offices and retail buildings in central London, especially in the City where some commentators predict companies could relocate to Europe or downsize.

Web - British Land - 18 July 2016

Activity has not entirely ground to a halt since the referendum. The FTSE 100 member has closed 17 long-term retail leases covering 58,000 square foot since Brexit. The rents agreed on these deals were 9.5% higher than expected.

British Land also reduced exposure to single-let retail units during the three months to 30 June. This was the result of almost £500 million of asset disposals, which helped lower loan-to-value to 29.7% from 32.1%.

The REIT trades on a 23% discount to net asset value. This probably reflects its exposure to offices in the City, where it owns the cheese-grater building on Leadenhall Street.


‘British Land is in a good position to manage any market correction, but the sector’s risk profile is higher and its return prospects lower,’ Liberum’s analysts note.

‘This warrants a discount to NAV. British Land has moderate, but higher financial and development risk than its closer peer Land Securities.’

Not having to refinance its debt for four years could help it through rougher times.

Issue Date: 18 Jul 2016