London offices boost British Land

4th Aug 2011 07:53

A £1.1bn office development programme in London that includes the "Cheese Grater" tower currently being built at Leadenhall Street, helped drive property giant British Land's valuations higher in the first quarter.Underlying pre-tax profits in the first quarter were up by 1.6% from the same period the previous year at £65m. The portfolio valuation climbed to £9.9m, a 3.4% rise over six months. "Our focus on high quality retail and London offices continues to drive strong valuation and improvement in rental values," chief executive Chris Grigg said. "The early decisions we made in undertaking our £1.bn development programme are having a real impact, accounting for nearly a quarter of our valuation improvement, and the highly selective acquisitions made since the beginning of the quarter will add both incremental income and value for our shareholders."Retail sites, including Meadowhall in Sheffield, one the UK's six "super-regional" shopping centres, account for 66% of British Land's portfolio, with London offices comprising the remainder.Broker Panmure Gordon noted that the quarterly dividend of 6.5p is "a little disappointing" as it had been looking for 7p."However, the shares still offer an appealing dividend yield of over 4.5%, even on the basis of a flat full-year dividend of 26.0p being maintained this year," it notes. Panmure also points out that five out of six of British Land's office projects are underway, with demolition to at Broadgate - following a failed attempt by heritage bodies to preserve the 1980s building that currently stands there - later this month.A report in the Financial Times this morning says that the Swiss bank UBS, the tenant in Broadgate, wrote to the government threatening to scale back its presence in London if the redevelopment plans were blocked.Work on British Land's sixth office project office, a site at London's Marble Arch, is due to begin later this year.---RG