British Land reports rise in occupancy

BRITISH Land said it intends to exploit a growing demand-supply imbalance in the London office market, as it booked higher first-half occupancy and net asset value (NAV).

British Land's NAV rose 4.2 per cent to 525p a share in the six months to September 30, against 504p at the end of March 2010. In the prior H1 period, its NAV was 372p a share, the company said in a statement.

"We've had a good start to the year with strong letting activity improving occupancy to 98 per cent and driving a further increase in (portfolio) valuation to 8.9bn," chief executive Chris Grigg said in the statement.

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"Looking forward, we expect to be able to exploit the growing demand supply imbalance in London offices and to benefit from a growing need from a significant number of retailers to take new space in the best locations," Mr Grigg said.

The company maintained its second-quarter dividend at 6.5 pence, contributing to a total first-half dividend of 13 pence a share, which was unchanged from the previous same period.

The 2.6 per cent rise in portfolio value was "broadly balanced between the first and second quarters," Mr Grigg said.

"Overall, the portfolio modestly outperformed the IPD benchmark, driven by the combination of successful office lettings and our portfolio weighting towards prime London office and retail," he said.

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The company's underlying first-half pre-tax profit was 127m, marginally down on the year earlier's pre-tax profit of 129m, which included a 16m credit provision release.

"The increase in underlying profits, excluding the provision release, was driven by new lettings and lower costs which more than offset the lost income from assets sold during 2009, principally Broadgate."

On November 12, British Land upped its bet on the prospects of London's Square Mile financial district by unveiling a 35m redevelopment of offices occupied by the Royal Bank of Scotland.

British Land last year sold half of the Meadowhall shopping centre near Sheffield to London & Stamford for 587.7m to reduce its exposure to big single investments.