The UK’s second-largest property group has said that although headline conditions in the retail sector remain tough, retailers are prepared to spend big if the location is right.
British Land, which owns Meadowhall in Sheffield as well as a raft of other retail properties, yesterday reported a 12.5% increase in net asset value per share to 567p and a 2.8% rise in underlying profits before tax to £256m for the year ending 31st March 2011.
“In retail, the polarisation of performance between the best retail assets and others was strongly in evidence as retailers continued to focus their space on a smaller number of larger stores in the better performing locations,” said chief executive Chris Grigg.
“Our retail portfolio continues to be well positioned to benefit from this trend. We saw good levels of demand for space on our schemes around the country with occupancy remaining strong at 98.5% in the UK,” he added.
Grigg added that although retail rental values across the market continued to fall during the year, its rental values started growing again in the second quarter and were 0.7% ahead for the full year.
“This trend was mirrored in our letting activity with new lettings agreed at 1.8% ahead of ERV for the year as a whole and 6.8% ahead in the second half,” he said.
British Land has moved to expand its retail and office portfolio during the past 12 months, snapping up properties with a total value of £511m. This includes Drake Circus shopping centre in Plymouth, an edge of town development site in Luton and two West End sites just north of Oxford Street.
Acquisitions made during the past year are expected to add £20 million in annual rent in a full year, net of asset disposals, the company said.