18th Jul 2016 09:58
LONDON (Alliance News) - British Land Co PLC on Monday echoed the sentiments of other commercial property developers as it said it remains too early to assess the impact the vote to leave the European Union will have on the UK market, but said it does anticipate more caution amongst occupiers and investors.
The shares of property companies have been sold off in the wake of the Brexit vote, amid concerns particularly about demand for retail and office space.
"It is too early to properly assess the impact of the referendum result on the markets in which we operate, but we do expect some occupiers and investors to take a more cautious approach," said Chris Grigg, British Land's chief executive.
"British Land has entered this period of post-referendum uncertainty in a robust position. We have a strong, resilient business with a clear strategy," Grigg added.
British Land's blue-chip rivals - Hammerson PLC, Intu Properties PLC and Land Securities Group PLC - have yet to provide updates following the vote, but Grigg's comments echo those of Great Portland Estates PLC CEO Toby Courtauld.
Earlier in July, as part of a trading update for the quarter to the end of June, Courtauld said uncertainty caused by the Brexit vote will likely have a negative impact on economic growth in London, where Great Portland focuses its activities. British Land has a big exposure to London through its City of London portfolio and retail properties across the capital, but also owns a range of shopping centres and other developments outside London.
"In the near-term, we expect confidence to reduce and some business investment decisions to be deferred, whilst negotiations to establish our trading arrangements with the EU are undertaken. As a result, we can expect London's commercial property markets to weaken during this period of uncertainty with the benefits of lower bond yields and weaker sterling offset by reduced rental growth prospects," Courtauld said.
Like Grigg, Courtauld said his company is well positioned to navigate through these challenges, a similar sentiment to that expressed by other real estate investors so far, including McKay Securities PLC, Workspace Group PLC and NewRiver Retail Ltd.
Liberum analyst David Brockton said that, while British Land is in a good position to manage any market correction, the risks it faces are higher than those of its peers. British Land has a higher proportionate exposure to City of London office properties and single-let, non-core retail properties, which could prove "more susceptible to occupier weakness", he said.
British Land shares were down 0.3% to 627.00 pence Monday.
Grigg said British Land had a "good quarter of activity" in the run-up to the UK's EU referendum. In the first quarter to the end of June, it secured 256,000 square feet of retail lettings and renewals. Office lettings and renewals in the quarter totalled 25,000 square feet.
Since the outcome of the EU referendum vote, British Land has reported new lettings at the Leadenhall Building, known as The Cheesegrater, in the City of London, meaning that building is now full.
Earlier in July, British Land also agreed the sale of the flagship Debenhams department store on Oxford Street in central London for GBP400.0 million, which brought the total value of sales made in its financial year to date to GBP499.0 million.
Retail footfall at its properties was flat in the quarter, it said. This was ahead of its benchmark for footfall in the quarter, British Land said. On Monday, the British Retail Consortium published data showing footfall in the UK was down 2.8% year-on-year in June, swung from a 0.3% rise in May and the sharpest decline seen since February 2014.
British Land said its occupancy rate is at 99% and said it remains in a good financial position, with no requirement to refinance its loan facilities for four years based on current commitments.
The group confirmed its dividend for the first quarter of 7.30 pence per share, 3.0% higher year-on-year.
By Sam Unsted; [email protected]; @SamUAtAlliance
Copyright 2016 Alliance News Limited. All Rights Reserved.
Related Shares:
British LandGPOR.L