British Land keeps annual outlook as leasing lifts rents

what happened

British Land expects underlying earnings per share of 16.1p for the six months ending 30 September, compared with 15.4p a year earlier, and underlying profit of £166m, up from £155m, according to Sharecast. Gains from bringing development space into use and tighter spending on running costs outweighed weaker surrender premium income and higher borrowing costs, the company stated.

Like-for-like net rental income rose 12%. Chief executive Jo McNamara, who started in September, described leasing activity as exceptional across all its properties.

During the period the group signed 1.4m sq ft of leases at rents 10.4% above estimated rental value (ERV), with another 1.1m sq ft under offer. London campuses recorded 78 deals covering 689,000 sq ft at rents 14.8% over ERV, and like-for-like net rental income there climbed 25% as tenant interest stayed robust and formerly empty space was filled. Retail park occupancy held at 99%, with 438,000 sq ft let at rents 9.6% above prior levels. Portfolio values gained 1.5% over the half, retail park valuations added 2.4% and ERV grew 3%. British Land sold £247m of assets, close to book value, and has a further £202m of disposals under offer. It reaffirmed full-year underlying EPS of at least 30.5p, growth of 6%, and medium-term annual EPS growth of 3% to 6%. Shares were up 3.0% at 420p by 0842 BST.

why it matters

For investors, the main signal is rent growth in London campuses and retail parks, which appears to be offsetting more expensive financing. The reaffirmed guidance points to management confidence but does not signal any change in profit expectations. Disposals close to book value also suggest the portfolio valuations are holding up.

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