British Land defensively positioned - UPDATE

9th Feb 2012 07:06

Occupancy, income, estimated rental value and, most importantly of all, underlying profits all rose in the third quarter of property group British Land.Underlying profit before tax in the October to December quarter rose 6.3% to £68m from £654m the year before. The net asset value per share climbed 8.2% to 593p from 548p a year earlier. The company declared an unchanged third quarter dividend of 6.5p, as previously indicated."Of course, the current economic outlook is uncertain, but overall our business is defensively positioned today and will benefit further as economic growth returns," claimed Chris Grigg, the real estate investment trust's Chief Executive Officer.The firm increased its UK retail development pipeline, with over one million square foot either committed or in the planning stage, while over 50% of the London office development programme is pre-let on unconditional contracts, securing £32m of annual income. Lettings are ahead of the estimated rental value (ERV) with total portfolio ERV growth of 0.2% over three months, and 2.3% over the last twelve. The firm attributed its success during the period to a combination of continued demand for its rental space, successful asset management initiatives and contributions from acquisitions. Overall, total occupancy increased over the three month period by 20 basis points to 98%, with leasing activity (including pre-lets) generating £8.7m per annum of new rent across the group. Grigg added: "We remain cautious about near-term prospects, particularly in the retail market. Looking through any near term variability however, with interest rates forecast to remain low and supply for the best space remaining constrained, we believe our high quality portfolio with long and secure leases will continue to generate good returns for our shareholders." Meanwhile, two sources said to be familiar with the discussions have claimed that the firm has put half of its 50% stake in Sheffield shopping mall Meandowhall up for sale, according to Reuters. The property is British Land's third largest property. In a conference call on Thursday Grigg declined to comment on the matter. The share price fell 2.01% to 497.8p by 09:37.NR/JH