Real estate investment trust British Land Co Plc (BLND.L,BTLCY.PK,BRLAF.PK) reported Monday a sharp decline in fiscal 2012 profit hurt by lower net valuation movement. Underlying earnings grew on increase in rental income. Net asset value and portfolio valuation also increased in the year. Citing confidence in its prospects, the company lifted its dividend, but issued a cautious outlook regarding economy.
Chief Executive Chris Grigg said, "These are good results, and that's in a tougher environment. Our profits, valuation and NAV are all up. We outperformed the broader UK commercial property market on almost all key measures and our balance sheet is strong."
For the year, pre-tax profit on ordinary activities plunged to 479 million pounds from 830 million pounds last year. Positive net valuation movement was 215 million pounds in the latest year, much lower than prior year's benefit of 591 million pounds.
On an underlying basis, pre-tax profit went up 5.1 percent to 269 million pounds reflecting increase in net rental income. The prior year's results included JVs & Funds underlying profit of 117 million pounds.
Earnings per share were 53.8 pence, significantly lower than the prior year's 95.2 pence, while underlying earnings per share improved 4.2 percent to 29.7 pence.
On European Public Real Estate Association, or EPRA basis earnings per share amounted to 29 pence, compared with 28.9 pence a year earlier.
For the year, net rental income increased 5.4 percent growth boosted mainly by acquisitions. Like-for-like net rental income grew 1.5 percent reflecting continued demand for high quality space and successful asset management initiatives.
The company noted that its EPRA net asset value or NAV grew 4.9 percent to 595 pence per share, with the valuation uplift of 2.6 percent to 10.3 billion pounds being the main contributor.
The value of properties in the UK retail edged up 0.4 percent against a challenging environment, while it fell 5.7 percent in Europe.
Grigg noted that last year has been much more challenging after two positive years as property values recovered from the sharp falls during the credit crisis and prime office rents in London rose significantly. This reflects the re-emergence of economic and political tensions in the Eurozone and the faltering of economic growth in the UK .
Further, the company said its Board has proposed a 1.5 percent increase in the fourth quarter dividend to 6.6 pence bringing the dividend for the full year to 26.1 pence. The Board also intends to pay a dividend of 6.6 pence per quarter for the coming 2012/13 financial year making a total of 26.4 pence.
Looking ahead, the company said it remains cautious about the overall economic environment which remains difficult. "we expect it to remain so with the UK economy growing slowly at best and the Eurozone crisis unlikely to resolve quickly. Against this background, we expect property capital values in the UK to be variable in the near term," it said.
In a separate statement, British Land said that Hercules Unit Trust has signed a new 350 million pounds five year loan facility provided by Lloyds TSB Bank PLC, Metropolitan Life Insurance Company and The Royal Bank of Scotland plc. British Land has a 41 percent interest in Hercules, the specialist retail warehouse fund managed by Schroder Property and advised by British Land.
With this, the company expects to fully repay the existing credit facility three months before it expires in October 2012.
British Land shares are currently trading at 486.30 pence, down 2.40 pence or 0.49 percent in London.
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by RTT Staff Writer
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