British Land Company PLC (LON:BLND) was sent swinging to a half-year loss as it wrote down the value of many properties due to the struggles of the retail sector.
The commercial property landlord, which owns the Meadowhall shopping centre in Sheffield and the Broadgate estate in London, reported that its overall portfolio shed 4.3% of its value in the six months to the end of September, with its retail properties the worst hit, suffering a 10.7% setback.
The valuation declines led to the company's EPRA net asset value falling 5.4% to 856p, partly offset by a £125mln share buyback.
Retail, which accounts for 41% of all British Land’s properties, saw like-for-like rents drift 3.2% lower due to an increase in retailers going bust or seeking company voluntary arrangements (CVAs), which allow struggling operators to redraw contracts in a bid to stay afloat.
The FTSE 100 landlord said that two thirds of store vacancies since April 2017 after CVA or administration have either been re-let, are under offer or in negotiations, while £289mln of assets were sold off as management ramped up plans to lean further towards commercial office space, which gained 0.4% value in the last six months.
Underlying profits for the half year dropped 10% to £152mln and, once subject to £562mln of EPRA asset adjustments and tax, resulted in a £404mln loss for the company.
Chris Grigg, chief executive, said that British Land expects markets to “remain uneven”, and that maintaining occupancy will remain a focus as challenges continue in retail.
Grigg added: “In London, we expect the market to remain good, with supply relatively constrained and high quality space, in well-connected, vibrant parts of town continuing to attract demand from a range of businesses.”
In October, Southwark Council granted planning permission for a mixed-use development at Canada Water in London, including offices, shops, and homes, sending its value soaring 12.4% to £347mln.
Shares sank 1.8% to 564.8p in early trades on Monday.