British Land Company PLC (LON:BLND) (LSE:BLND.L) has released a Q3 update to the stock market today. It has leased or renewed agreements on 314,000 sq ft of retail space, with rates 8.7% ahead of ERV. It also has a further 189,000 sq ft under offer.
Investors are likely to be encouraged by retailer sales growth in Q3 of 0.6% year on year. This is an outperformance of the benchmark by 200 bps. Footfall for the quarter was 0.6% below Q3 last year, but still outperformed the benchmark by 220 bps.
British Land’s occupier base is high quality and diverse according to today’s stock market update, with 97% occupancy and an average lease length of 8 years. The speculative development commitment remains at just 5% of the total portfolio. Based on current commitments, the company has no requirement to refinance until 2020.
The third interim dividend payment for the quarter will be 7.3p per share. This is a 3% increase on the dividend per share from last year and will be paid on 5 May.
In the last six months, shares in British Land have fallen by 6% and underperformed share market peers Persimmon plc (LON:PSN) (LSE:PSN.L), Berkeley Group Holdings PLC (LON:BKG) (LSE:BKG.L), Taylor Wimpey plc (LON:TW) (LSE:TW.L) and Land Securities Group plc (LON:LAND) (LSE:LAND.L). Persimmon’s shares are up 21%, Taylor Wimpey’s stock has risen 12%, Berkeley’s shares are up 7% and Land Securities has registered a share price fall of 5%.
In my view, British Land has investment appeal in the long run. However, I believe 2017 will be an uncertain year for property investment in the UK as Brexit could cause investors to become more risk averse. This could hurt the valuations of London property and UK property, as well as demand for retail space. Therefore, while I’m optimistic about British Land’s investment performance in future years, I feel it could be a relatively volatile investment in the short term.