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Summary
- British Land Company Plc had reported a decline of 21.4% in its net rental income during H1 FY21.
- The valuation of its entire portfolio of the Company went down by 7.3% as of 30 September 2020.
- The Company had sold its 75% interest in West End to Allianz Real Estate for £401 million.
- The Company had declared an interim dividend of 8.4 pence per share during H1 FY21.
British Land Company Plc (LON:BLND) is the FTSE 100 listed real estate company. Based on its 1-year performance, shares of BLND have generated a return of about negative 20.75%. Shares of BLND were up by close to 2.26% from the last closing price (as on 29 December 2020, before the market close at 08:30 AM GMT).
British Land Company Plc is the FTSE 100 listed real estate company having a portfolio of London-based high-quality commercial property and retail across the UK. The Company is one of the largest real estate player in Europe, managing a portfolio valued at £10.31 billion as of 30 September 2020.
Business Model
The Company owns, manages and finances a portfolio of commercial and residential properties. The Company is currently working with high-quality occupiers as shown below -
(Source: Company result)
Recent News
On 23 December 2020, the Company had updated that it had sold a 75% stake in its portfolio of three buildings located in West End to Allianz Real Estate for £401 million. The deal was made on behalf of several Allianz Group companies. The transaction has shown a net initial yield of 4.32%, which is more than its book value in September 2020, and it is expected to complete in January 2021. The completion of this transaction had made total assets disposal in FY21 to date at £1.1 billion.
On 18 December 2020, the Company updated that it had completed the drawdown of a 500-year headlease with Southwark Council. This collaboration with Southwark Council would see the planning for the Canada Water Masterplan, which was approved in May 2020. The new 500-year headlease will witness significant investment and redevelopment opportunity in the site with Southwest Council owing 20% stake initially, having pro-rated ownership to a maximum of 20%.
H1 FY21 results (ended 30 September 2020) as reported on 18 November 2020
(Source: Company result)
- The net rental income of the Company was declined by 21.4% to £191 million during H1 FY21 due to significant adverse impact of Covid-19 pandemic.
- Similarly, the underlying profit also plunged by 29.6% from £152 million during H1 FY20 to £107 million for H1 FY21 ended on 30 September 2020.
- The underlying earning per share also dropped by 34.8% to 10.5 pence per share during H1 FY21 due to an increase in provision for rent receivables.
- Regarding the valuations, the portfolio of the Company, went down by 7.3% with office segments reported a 3.1% drop and retail segment fell by 14.9%. The Development segment remained broadly flat during H1 FY21. The total portfolio is valued at £10.31 billion as of 30 September 2020.
- On the liquidity front, the Company had £1 billion of undrawn banking facilities and cash, It does not need to refinance till 2024.
- The Loan to Value ratio stood at 35.7% as of 30 September 2020.
- The Company had declared an interim dividend of 8.4 pence per share, which represented 80% of earning per share, to be paid on 19 February 2021.
- The Fitch Ratings had affirmed credit rating at ‘A’.
Operational and Strategic Highlights (as on 18 November 2020)
- The occupancy rate of the office segment was around 95% with 65,000 sqft of deals matured by more than one year during H1 FY21.
- The Company had collected around 97% of office rent for the September quarter.
- The Company had secured plans to develop a 53-acre scheme at Canada Water.
- On the retail front, the Company had around 86% of stores operational before the starting of November lockdown.
- The Company had reported an occupancy rate of 95% for its retail segment with 161,000 sqft of deals are matured by more than one year. The footfalls for September and October 2020 remained at 82% of the equivalent period of the prior year.
- The Company had collected 62% of its rent for the September quarter.
- The Company had sold assets worth £2.1 billion since 2018.
Share Price Performance Analysis of British Land Company Plc
(Source: EODHD/Others, chart created by Kalkine group)
Shares of British Land Company Plc were trading at GBX 515.40 and were up by close to 2.26% against the previous closing price as on 29 December 2020, (before the market close at 08:30 AM GMT). BLND's 52-week High and Low were GBX 641.98 and GBX 309.40, respectively. British Land Company Plc had a market capitalization of around £4.67 billion.
Business Outlook
The leasing volumes are continued to remain impacted by rising uncertainties caused due to Brexit and Covid-19 pandemic as customers will seek to defer their leasing decisions and extend their leases as long it is possible. From the long term perspective, the occupiers will focus more on high-quality, sustainable space which allows people to work with more flexible during these challenging times. The Company has generated substantial potential sales as it seeks high demand from occupiers of around three to five years. The Company has highlighted that it is witnessing increasing demand from overseas investors as they are carrying positive sentiments for investing in London, and it will further strengthen once the travel restrictions are lifted.
The retail business segment will continue to face several operational headwinds as occupiers will remain under pressure and in the dilemma of choosing the best out of several options. The Company has changed its dividend payment cycle from quarterly to semi-annually and will pay a dividend during the announcement of interim results and full-year results.
