British Land to 
quit Europe in £255m sell-off

British Land said its mainland European properties, which account for 2.4 per cent of its £10.5bn portfolio, fell 17 per cent in value in the year to the end of March, hit by rental concessions and widening yields.

Nearer to home. the company also said it was delighted with its new long-term joint venture with Norges Bank Investment Management at Meadowhall, near Sheffield.

“Looking forward, we consider Europe to be a subscale business for us and our intention is to exit over time,” chief executive Chris Grigg said, adding that the company was not having active discussions with buyers at the moment.

”It could be a long haul, the market’s not that easy in Europe at the moment and we don’t expect any near-term announcement but this is a very clear statement of intent,” he said.

British Land entered mainland Europe in 2005 with the purchase of Pillar Property, which had assets in Spain and Italy.

It co-owns Spain’s biggest shopping centre, the 2.2 million square foot Puerto Venecia shopping centre in Zaragoza, and owns a 65 per cent share in continental European property fund PREF.

Retail sales in the euro zone fell for the second month in a row in March, reflecting the high jobless rate and restricted credit conditions, with the worst slump seen in Spain where retail sales fell 10.5 per cent on an annual basis.

Like its rivals Hammerson and Land Securities, British Land has been focusing on its core office and shopping centre businesses in London and key UK regions to combat the tough economic outlook facing property markets in Britain and Europe.

In March, it raised almost £1bn for new investments and developments via a share placement and sale of an office block in the City of London financial district.

The company, which is building the Cheesegrater skyscraper in the City of London, said its EPRA (European Public Real Estate Association) net asset value for the year to the end of March rose 0.2 per cent to 596 pence per share, while profits before tax increased 1.9 per cent to £274m.

It also increased its dividend by 1.1 per cent to 26.4 pence a share.

Commenting on the results, Mr Grigg said: “It’s been a highly active and successful year and we have demonstrated our strategy in action in the broadest sense. Profits are up despite the significant level of recycling, and at the property level, we have continued to outperform.

“Our investment activity means the business is stronger going forward, and our recent share placing gives us significant capacity to take advantage of the increasing opportunities we see coming to the market.”

In a statement to accompany the results, British Land said its retail business had experienced another busy and productive year, operationally and strategically.

The statement added: “Our operational performance continues to be resilient in tough markets. At the same time, we are actively evolving our portfolio through investment in our existing properties and through recycling.”

In a statement, British Land said its asset management activities had been focused on continuing to improve its retail offering by attracting a broader range of retailers, leisure, food and beverage operators; upgrading the “physical environment” and enhancing services by using digital technology.

The statement added: “We were also delighted to sign a new long-term joint venture at Meadowhall shopping centre with Norges, one of the largest sovereign wealth companies in the world. Norges bought their 50 per cent stake from our previous partner, London and Stamford.

“While footfall performance across our portfolio was weaker, down 1.5 per cent, we continued to outperform the market with Meadowhall and retail parks both ahead.”

Meadowhall is home to 280 stores across 1.5m sq ft of floor space, and attracts around 25m visitors a year. It was built on the site of a former steelworks.