British Land: Retail park exposure “paying off”
The chief executive of British Land Simon Carter has said the real estate investment trust’s high exposure to retail parks is “paying off”.
This comes as the group releases a report for the six-month period ending 30th September 2024, during which it made £456m of non-core disposals and invested £711m into retail parks. These disposals included British Land’s sale of its stake in Meadowhall, completed in July.
During the period, the REIT recorded an underlying profit of £143m, a year-on-year increase of 1%. The group’s retail park occupancy rate is now at 99%, and its retail park portfolio valuation has increased by 5.1% since April.
Since the period end, the group has also raised £301m via an equity placing.
Simon Carter said: “We are pleased the operational and financial momentum in our business continues. Strong levels of leasing ahead of ERV and sustained cost discipline enabled us to grow profits again, despite significant development activity, which will be a key driver of future profit growth. Our values were up 0.2%, with a particularly strong performance in retail parks offsetting residual yield movement in campuses.
“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. Since 2021 we have increased our exposure to retail parks from 15% of the portfolio to 32% today. This conviction is paying off, with retailers competing for cost-efficient out-of-town space to support their online operations. This is leading to strong rental growth and valuation uplifts which are outperforming all other subsectors.”
He added: “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 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.”
You can read more about British Land’s retail park format in our exclusive article here.