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British Land swings into the red as property portfolio value tumbles

British Land is working on a large mixed-use project at Canada Water (British Land)
British Land is working on a large mixed-use project at Canada Water (British Land)

Sliding values across British Land’s huge estate has pushed the property giant to a statutory £1 billion pre-tax loss in a “volatile” economic and political year, but the landlord cheered a flurry of new lettings and rental growth.

The developer, which is behind schemes such as Broadgate next to Liverpool Street station, also owns retail parks, life sciences space and urban logistics sites in London.

Chief executive Simon Carter said there was plenty to be upbeat about, from a underlying profit rise of 7% to retail parks recording rental growth for the first time in four years.

He added: “Whilst we remain mindful of ongoing macroeconomic challenges, the upward yield pressure appears to be easing and there are early signs of yield compression for retail parks.”

But the company was not immune to headwinds hitting the commercial property sector. British Land marked down the value of its portfolio to £8.9 billion in the year to March 31, compared with £10.5 billion in the prior 12 months.

That partly reflected some disposals but also wider market conditions. Borrowing costs leaping last year made real estate look less attractive to some investors, and the company had warned at its last set of results in November that valuations were likely to fall further as higher interest rates push up property yields, which move inversely to prices.

The firm recorded a £1 billion pre-tax loss compared with a £963 million profit in the prior year.

Carter said the company “delivered a good operational performance despite the challenging macroeconomic backdrop”.

He pointed to over £100 million of new leases being agreed, demand for life sciences space set to be strong, and said tenant negotiations for some 1 million square feet of office space is underway.

The boss told the Evening Standard there is a theme of some office occupiers taking slightly less space but doubling down on quality space, with good amenities and strong sustainability credentials.