British Land gives confident outlook as H1 profits rise

13th Nov 2013 07:31

- Underlying profits up 6.6 per cent- Rental income rises, leasing activity up- Company in 'good shape', London market remains 'bright'London- and South East-focused property group British Land reported a 6.6 per cent increase in underlying profits as it leased more space during the first half.The company raised its half-year dividend to 13.5p a share, up 2.3% on the year before. This was "a small but unexpected positive", according to analysts at Jefferies.Underlying profit before tax (PBT) totalled £146m for the six months to September 30th, up from £137m in the first half last year. Meanwhile, reported PBT surged to £422m from £109 the year before.British Land said it had a stronger period of leasing with higher levels of letting volumes across the portfolio. In the standing investments, lettings and renewals were signed ahead of the estimated rental value (by 5.4%) and previous passing rents.Net rental income, excluding the group's share of joint ventures and funds increased to £148 from £142m previously, with like-for-like net rental income rising by 1.2%.Net asset value per share was up 4.5% year-on-year at 623p, beating consensus forecasts by 10p.The total property return across the group in the first half was 5.5%, compared with the IPD sector benchmark return of 4.9%, with both retail and office portfolios outperforming.The value of the UK portfolio was £11.2bn, up 2.8% since the start of the financial year, with a 2.1% uplift from standing investments and an 8.9% valuation increase from developments. The European retail portfolio fell by 4.3% to £241m in value, but the company assured that Europe accounts for just 1% of group assets after adjusting for a post-period sale.The company gave an upbeat outlook, saying that the future of the London property market remains "bright", driven by improving occupational demand for offices and residential properties.Chief Executive Chris Grigg said that the business is in "good shape" and hailed its increased exposure to London and the South East, along with a replenished development pipeline and focus on locally-dominant retail assets.BC