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LONDON,: Real estate company British Land posted 25% growth in third-quarter net asset value (NAV) and expects future buying opportunities at more realistic prices as Britain experiences a muted economic rebound.
British Land — whose portfolio is dominated by prime retail and offices — said third-quarter NAV per share was 548 pence (RM26.99), up 25% year on year. Its portfolio value was £9.3 billion at Dec 31, 2010, up 13.1%.
"From our perspective we feel we're well placed to take on acquisitions... so it really depends on the rate at which good value acquisitions emerge. Although I think that rate will be higher than it's been," chief executive Chris Grigg said.
The company committed about £330 million to deals in the third quarter. It was seeing an increasing number of assets coming to market from banks and other vendors, meaning "we should do more (deals) than we've seen," Grigg said.
He did not expect fourth-quarter deals to dramatically alter British Land's loan-to-value ratio, which was 23% at group level on Dec 31, 2010, and at 45% if the company's exposure to joint ventures and funds was included.
Panmure Gordon analyst Mark Hughes said British Land's results were ahead of his expectations from a NAV perspective, upping his target price on the shares to 555p, from 548p. Hughes retained a "Buy" rating on the stock.
"We would expect capital value growth from yield re-compression to now slow. Our full year NAV forecast is upgraded to 551p per share," Hughes said in a note.
Nomura analyst Robert Duncan said he was looking for a "game-changing, value-add deal from British Land. This (the third-quarter results) was not it."
At 0937 GMT, shares in British Land were up 0.46%, outperforming a 0.15% rise in the broader index of UK property stocks.
Grigg said he expected the UK economic recovery to be muted, but said the company was well placed to benefit from occupier and investor demand for high-quality space in retail and central London offices.
In February, IPD's monthly index showed UK commercial property capital growth slowed to 0.1%, confirming the rebound in prices had lost steam on the back of concerns about the economy and government spending cuts.
"We have focused our business on those sectors of the property market where we believe the underlying demand dynamics — high quality retail and central London offices — are expected to remain positive," British Land said in a statement.
In the three months to end-December 2010, British Land booked an underlying profit before tax of £64 million, up 10% from £58 million a year earlier. Its dividend for the period was flat at 6.5p a share.
British Land's occupancy averaged 98.1% across its portfolio, with average lease lengths of 12.1 years. Its estimated rental values (ERV) for offices was up 1.4% at end-December, while its retail ERV was up 0.4%. — Reuters
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