British Land shows signs of stabilisation after a period of uncertainty as the company transitions its portfolio to better-performing assets.
Property operators have suffered during the pandemic, and uncertainties around working and shopping trends have rocked rental value across vast swathes of commercial properties.
British Land reacted by shaking up its portfolio, and the Real Estate Investment Trust’s realignment is gathering pace. British Land has disposed of non-core assets and reinvested in retail parks to capture the out-of-town shopping experience, a mainstay for consumers as high streets crumble away.
Retail parks now account for 32% of the portfolio, up from 15% in 2021. The company also mentioned robust demand in the City and sees a supply/demand imbalance in the coming periods.
The portfolio’s realignment has culminated in 3% rental growth over the recent half-year period and guidance for 3%- 5% rental growth over the full year.
“British Land is laying solid foundations for recovery, proving that even in challenging markets, a giant landlord can still think on its feet. Rent growth is driving revenues forward while stabilising interest rates are helping to steady property values. The focus on retail parks and London campuses continues to deliver, tapping into areas of strong, sustainable demand,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.
“Retail parks are the clear standout. British Land’s recent £441m acquisition of seven new parks was a bold move, cementing its position as a leader in this space. These assets, prized for their affordability and flexibility, are benefiting from a wave of retailer expansion, and British Land’s confidence here looks well-placed.”