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British Land says retail park focus is ‘paying off’

News

Tim Burke

20 November 2024

Investment/finance, Retail

British Land’s chief executive has said the REIT’s focus on retail parks “is paying off”, as the asset class grows to a third of its portfolio.

In results for the six months to 30 September, the company posted an underlying profit of £143m, largely flat year-on-year, and an IFRS post-tax bottom line that was back in the black at £109m. Its portfolio value nudged up to just shy of £8.9bn.

Chief executive Simon Carter pointed to the success of the retail park strategy, which has seen the asset class grow from 15% of the portfolio in 2021 to 32% now. The subsector was the only one to post valuation growth, at 5.1%, with campuses down by 1.7% and London urban logistics down by 2.6%.

“Since April, we have disposed of £456m of non-core assets and rapidly deployed £711m into retail parks, one of our preferred subsectors, given their attractive occupational fundamentals and high occupancy,” Carter said.

Last month, British Land acquired a portfolio of seven retail parks from Brookfield for £441m.

“This conviction is paying off, with retailers competing for cost-efficient out-of-town space to support their online operations,” Carter said. “This is leading to strong rental growth and valuation uplifts which are outperforming all other subsectors.”

Carter added that the “super prime space” being developed on British Land’s campuses “is benefiting from a significant imbalance between the demand and supply for new and substantially refurbished space”.

That is particularly true in the City of London, Carter said, where the REIT estimates there is a shortfall of 5m sq ft over the next four years.

“While geopolitical risk remains elevated and there has been some volatility around the recent Budget and US election, British Land’s portfolio is well positioned for the inflection in the cycle,” the chief executive said. “The continued strength of our occupational markets, underpins our guidance of 3-5% rental growth across the portfolio, and our ability to generate attractive future returns.”

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British Land

British Land’s chief executive has said the REIT’s focus on retail parks “is paying off”, as the asset class grows to a third of its portfolio. In results for the six months to 30 September, the company posted an underlying profit of £143m, largely flat year-on-year, and an IFRS post-tax bottom line that was back in the black at £109m. Its portfolio value nudged up to just shy of £8.9bn. Chief executive Simon Carter pointed to the success of the retail park strategy, which has seen the asset class grow from 15% of the portfolio in 2021 to 32% now. The subsector was the only one to post valuation growth, at 5.1%, with campuses down by 1.7% and London urban logistics down by 2.6%. “Since April, we have disposed of £456m of non-core assets and rapidly deployed £711m into retail parks, one of our preferred subsectors, given their attractive occupational fundamentals and high occupancy,” Carter said. Last month, British Land acquired a portfolio of seven retail parks from Brookfield for £441m. “This conviction is paying off, with retailers competing for cost-efficient out-of-town space to support their online operations,” Carter said. “This is leading to strong rental growth and valuation uplifts which are outperforming all other subsectors.” Carter added that the “super prime space” being developed on British Land’s campuses “is benefiting from a significant imbalance between the demand and supply for new and substantially refurbished space”. That is particularly true in the City of London, Carter said, where the REIT estimates there is a shortfall of 5m sq ft over the next four years. “While geopolitical risk remains elevated and there has been some volatility around the recent Budget and US election, British Land’s portfolio is well positioned for the inflection in the cycle,” the chief executive said. “The continued strength of our occupational markets, underpins our guidance of 3-5% rental growth across the portfolio, and our ability to generate attractive future returns.”