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British Land suffers amid tough market

Thursday, 14 August 2008 12:00 AM

British Land announced a sharp fall in profits this morning, as the tough economic climate takes a toll on activities.

In the first quarter of the financial year the construction company made a loss of some £572 million, compared to a profit of £266 million for the same period last year.

Depressed economic sentiment also forced the company to writedown the value of its multibillion pound property portfolio by five per cent.

Rent increased, with overall like-for-like rental income growth of 6.3 per cent, set against 3.3 per cent in the same quarter last year.

"British Land's first quarter results reflect the pressures of a challenging external environment, as asset valuations continue their decline and previously above trend rental growth moves prospectively to below trend," explained British Land chief executive, Stephen Hester.

However, Mr Hester explained the organisation's prime property assets are likely to see out many economic cycles, and "as spring follows winter" property markets will see better times again.

In the short-term, British Land appears to have mothballed one of its flagship products.

The major City of London skyscraper office development at 122 Leadenhall - know as the Cheesegrater - will be reviewed in terms of "timing of construction and target completion in order to optimise cost and occupational demand."

Net asset value per share in the company fell ten per cent, to £12.12, in the quarter British Land also confirmed.

Shares in British Land were up 0.35 per cent at 09:45 BST this morning, standing at 724.50 pence per share following the release of the results.

Chris O'Toole

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