British Land Co PLC (LON:BLND) shares gained on Thursday after the real estate giant saw its annual profit rise substantially on property revaluations despite challenging market conditions.
For the year to the end of March, the FTSE 100-listed firm posted a pre-tax profit of £501mln, up from £195mln a year earlier, as revenue increased to £639mln from £589mln.
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The big profit boost came after British Land booked a £202mln gain from the revaluation of properties, swinging from a revaluation loss of £144mln a year earlier.
The group’s EPRA net asset value per share rose by 5.7% to 967p, up from 915p a year earlier, reflecting a portfolio valuation gain of 2.2% and the impact of British Land's £300mln share buyback programme announced in July 2017.
However, the company’s underlying profit, which adjusts for property revaluations, gains and losses on investment and trading property disposals, slipped £380mln from £390mln.
British Land’s chief executive, Chris Grigg said: “Leasing activity has been strong across our business. In London Offices, our unique campus offering is driving demand for our space, and we successfully launched Storey, our flexible workspace offer.”
He added: “Looking forward, we are mindful of the uncertainties. In retail, market conditions are likely to remain challenging.
“In offices, demand for our space is healthy, with a range of businesses continuing to commit to London and the supply of high quality new space relatively constrained in the short term.”
Dividend the key
British Land declared a final dividend of 7.52p per share, taking its total payout for the year to 30.08p, up 3% on last year.
For the year ahead, the group said it proposes to pay a dividend of 31.00p, another 3.0% increase.
In late morning trading, British Land shares were 2.1% higher at 695.20p.
Nicholas Hyett, equity analyst at Hargreaves Lansdown commented: “With Brexit threatening to force bankers from London and retailers struggling in the face of ever rising costs and online competition, conditions are hardly rosy for British Land.
“However, the group’s strategy of targeting high quality destination shopping centres and mixed use London campuses have been insulating it from the worse effects. That its portfolio valuation has actually improved this year is testament to that.”
But, he added, the reason for investing in British Land at the moment is really its dividend.
Hyett concluded: “A high quality list of blue chip tenants and relatively long leases means it has excellent visibility over future income and that’s allowed it to steadily increase the dividend with confidence.”