Shares in the major property companies took a hit this morning after British Land disappointed the market with its third-quarter figures.
British Land suffered the biggest fall this morning – down 3% to 1628p – after producing results for the three months to 31 December that were slightly below analysts’ forecasts and underperformed the Benchmark Investment Property Databank figures..
Net asset value dropped to 1610p a share as a result of the £338m entry charge for becoming a REIT on 1 January and a £77m charge for refinancing debt. Without these two costs, the NAV would have risen by 3.8% to 1685p a share.
British Land’s portfolio rose by just 1.7% in value, compared with the IPD increase of 2.6%. ‘This is due to booking less yield shift than the index,’ said chief executive Stephen Hester. London offices, which account for a third of the £13.9bn portfolio, were up by 3.2%. Retail warehouses, which account for a quarter, were up 2%, but shopping centres fell by 0.6%, mainly as a result of the loss incurred on the £200m sale of the Queensmere and Observatory centres in Slough.
Hester also repeated his cautious outlook on the UK property market. ‘The property market in recent years has obviously enjoyed supernormal returns... We believe that the process has run its course. So that property market will grow, driven by fundamental rental growth, i.e. at slower pace than before,’ he said.