Property investor British Land (BLND) fell 3.5% to 493p as first half results revealed the impact the pandemic has had on its portfolio.
The slump in the share price should also be seen in the context of an advance from around 350p earlier this month following increased hopes of a reopening of the economy on vaccine breakthroughs.
The company also resumed its dividend, albeit at 8.4p compared with 15.97p a year ago, despite reporting wider losses in the first half of the year as lower net rental income and a fall in the value of its portfolio of retail properties weighed on performance.
For the six months ended 30 September, pre-tax losses widened to £757 million from £440 million year-on-year as revenue slipped to £255 million from £328 million.
Net rental income fell to £191 million from £243 million, while the portfolio value was down 7.3%, with offices down 3.1% and retail down 14.9%, while developments were 'broadly flat,' the company said.
‘Covid-19 has had a significant impact on retail, which was already facing structural challenges as a result of the growth of online,’ it added.
STRATEGIC MOVES
Looking ahead, the company said leasing volumes in its offices segment were ‘likely to be lower as we expect customers to continue to defer decisions and extend existing leases where they can.’
In a separate note, the company said it had completed the sale of Clarges Mayfair to Deka for £177 million, 7.6% above the September 2020 valuation.
Numis analyst Robert Duncan commented: ‘As hoped, 1H21 results are more ‘strategic’ than might be expected in the normal course, with CEO-elect Simon Carter outlining his vision for the group which includes focusing on 4 strategic priorities: realising the potential of mixed-use; progressing value accretive development; addressing the challenges in retail; and, active capital recycling.
‘In many ways, Simon is using a similar ‘play book’ to Land Securities CEO Mark Allan, although there are two key differences: 1) Canada Water is at a more advanced stage than Land’s urban regen schemes, and 2) British Land has been more active in selling retail with £456 million of retail assets sold since the start of FY21 at +7% vs book value and £219 million of offices (post-period in Nov) at +8% vs book value as part of its broader plan to reduce weighting to retail.’
