The company posted its second-quarter figures yesterday, showing pretax profits of £76m, a 4% rise on last year.
British Land said the value of its offices rose 2.9% in the City of London and by 4.6% in the West End. Retail warehouses were up 0.8% and shopping centres down 0.7%.
Net asset value per share rose to £17.30, against £16.82 at the end of the first quarter. Net rental income rose to £167m, lifting underlying profits to £76m. Average rental growth at 2.2% was ahead of the market average of 1.1%.
Earnings per share, helped by a lower tax rate from the company's REIT status, rose from 11p to 14p and there will be a 8.75p dividend in November. The group expects to pay at least 35p in dividends for the year and has begun a £250m buy-back programme.
However, shares in the company are trading at a 30% discount to net asset value, amid fears that values in parts of the commercial property sector are softening because of higher debt costs.
British Land has warned of price falls in the UK’s commercial property market and expects several rival office schemes planned for the City of London to be postponed or abandoned.Chief executive Stephen Hester said a ‘realignment in retail [property investment] is going on’, and warned of price falls in the office market.
He warned the rapid rise in the cost of borrowing could scupper smaller developers that were planning speculative office schemes in the capital.