British Land said it has sold more than £400m of retail properties since the pandemic erupted and plans further disposals, as the FTSE 100 group revealed the damage the crisis has inflicted on its portfolio.
The group, which is best-known for its office buildings, including London’s Broadgate, said that the overall value of its portfolio had fallen from £11.2bn on March 31 to £10.3bn on September 30.
Its retail portfolio suffered the most, losing 15 per cent over the period for a valuation of £3.2bn at the end of September, British Land said on Wednesday. Since then, the UK government has imposed a further lockdown on all non-essential retailers in an effort to combat a resurgence of the virus.
Reflecting the fact that office properties have generally been hit less hard by lockdowns, British Land said office tenants had paid 97 per cent of the £48m in rent they owed during the period. Retail tenants paid just 62 per cent of the £64m they owed.
Colm Lauder, an analyst at Goodbody, said that the property group was “increasingly becoming a London office specialist”. It had “made real progress where its come to [retail] disposals, despite having an investment market that’s largely paralysed as a result of Covid”, he added.
Simon Carter, who takes over as British Land chief executive this week, said the group would look to repurpose its retail properties where selling them off was not possible.
Like rival Land Securities, British Land would seek to capitalise on the boom in ecommerce by turning some retail properties into warehouses and delivery sites, said Mr Carter.
Overall, British Land fell to a pre-tax loss of £757m for the first half of its financial year. That compared with a loss of £440m in the same period a year ago. Revenues fell to £255m from £328m.
Shares in British Land were down almost 4 per cent in early trading on Wednesday. In common with other companies disrupted by the pandemic, the group’s stock has surged since Pfizer and Germany’s BioNTech revealed a breakthrough in the development of a Covid-19 vaccine early last week, climbing more than 30 per cent.
The news sparked optimism that shoppers may soon return to high streets and employees to their offices. British Land said that just a tenth of workers across its portfolio were at present heading into the office.
“The vaccine is great news but there’s still a lot to navigate through to get it. The reaction of the share price demonstrates how Covid-specific [investor concerns] were,” said Mr Carter.
Despite the recent rally, shares in British Land remain some way below the £6.28 at which they were trading at the start of the year.