British Land’s half-year net rental income fell 5.6% to £218mn, driven by disposals and some asset refurbishments. Like-for-like rental growth of 3% was driven by campus and urban logistic sites. Higher rents, along with lower relative costs, helped underlying profit rise 1% to £143mn.
Estimated rental value (ERV) rose 2.5% (potential property income under ideal conditions). Total occupancy across the portfolio was 98%.
The portfolio value grew 0.2% to £8.9bn as yields stabilised over the half. The portfolio’s loan-to-value rose to 38.7% from 37.3%, reflecting higher development investment.
Since 1 April, there have been £456mn worth of disposals, and £711mn of acquisitions in the retail park space.
For the full year, ERV growth is expected to be 3-5% across all markets.
The board has proposed a dividend of 12.24p per share, up 1%.
The shares fell 1.9% in early trading.
Our view
British Land is showing encouraging signs of recovery. Rent growth is boosting revenue, while stabilising interest rates are helping to keep property values steady after a tough period.
London campuses remain a priority, with demand for high-quality, well-connected office spaces driving leasing activity. Occupancy is strong, in the 90% range, and recent pre-lets with major tenants highlight the appeal of its top-tier spaces. We remain mindful of how this sector will perform, given the exact nature of working from home vs office is yet to fully shake out.
The science & technology sector is a key part of this strategy. It currently accounts for about 20% of British Land’s campuses but could rise to 50% by the end of the decade. Recent progress at key sites like 1 Triton Square and The Optic in Cambridge shows the company is successfully attracting tenants in this fast-growing field.
Urban logistics is another exciting growth area. The company is focusing on central London, where demand for warehouse space is high and supply is tight. Projects like Mandela Way - multi-storey warehouse - show British Land is adapting to trends like e-commerce and same-day delivery.
But its retail parks that have been a standout performer, with strong leasing activity and rents exceeding expectations. Over £700m was spent acquiring retail parks during the first half, including a major £441mn deal for seven new sites. These parks are popular with retailers because they are affordable, easy to access, and adaptable. The group’s growing portfolio in this area is well-positioned to benefit from continued demand for out-of-town shopping locations.
Development is making a comeback, with a focus on urban logistics and campuses. Work is progressing on key sites like 2 Finsbury Avenue and Regent’s Place. With construction costs stabilising and rents rising, the outlook for new developments is improving after a tough period.
The company’s finances remain strong, with enough funding available to help support future growth and dividends. The flexibility in its dividend policy provides additional security in uncertain times – though no shareholders returns are guaranteed.
British Land is well-positioned for the future. Its focus on retail parks, urban logistics, and campuses reflects a shift to areas with the strongest potential for growth. As market conditions improve, the bold investment strategy should yield results, but it certainly adds risks. If interest rates and inflation remain elevated, sentiment will be impacted.
Environmental, social, and governance (ESG) risk
Broadly, real estate is relatively low risk in terms of ESG. One of the principal drivers of this risk is the capacity to integrate material ESG considerations into decision-making, risk management and public reporting; the most material ESG considerations are environmental, like carbon emissions reduction, energy efficiency and physical climate risk. The rise of hybrid working has also reduced demand for commercial property, making product governance and customer satisfaction a top priority. Other risks to monitor include labour relations, business ethics, and emissions & waste.
According to Sustainalytics, British Land’s overall management of material ESG issues is strong.
British Land Co. Plc has a robust environmental policy, with a portion of executive remuneration explicitly tied to sustainability performance targets. The company also has an effective whistleblower program. Additionally, board-level oversight is in place for ESG matters. However, its ESG reporting does not yet fully align with leading industry standards.
British Land key facts
All ratios are sourced from Refinitiv, based on previous day’s closing values. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn’t be looked at on their own – it’s important to understand the big picture.
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