AGM Statement

RNS Number : 8641Y

British Land Co PLC

11 July 2008

 



       11 July 2008

AGM Statement 2008

British Land holds its Annual General Meeting this morning at 10 a.m. at The Cumberland Hotel, London.

Extracts from comments by the Chairman, Chris Gibson-Smith, to be made at the meeting are as follows:

"British Land has made a resilient start to the financial year. First quarter (to 

30 June) underlying EPS, to be published on 14th August, is expected to be ahead of the preceding quarter to March. Net Asset Value will be reduced as asset valuations continue to reflect weak financial markets and economic slowdown. The pace of valuation adjustment, as can be seen from property market indices generally, is expected to be above that of the quarter to end March, but well below the December 2007 quarter's decline. Gearing remains around 40% (LTV) and around 47% (LTV) including Funds and Joint Ventures.  

We expect to declare a 9.375p/share dividend for the quarter, up 7% on the prior year period.  

As laid out more fully in our Annual Report published last month, British Land continues to implement its activist customer-led strategy. While tougher markets make progress more challenging, progress remains clearly in evidence. During the quarter, sales were contracted totalling £669 million, including the £400 million sale of the Willis Building, realising good development profits as well as highlighting investor interest in our prime buildings. We also continue a wide range of asset management initiatives, delivering rental growth from reviews in both the Office and Retail segments as well as 352,000 sq ft of new lettings (87% Retail, 13% Office).

British Land's actions,  prior to the market downturn and since, continue to stand us in good stead.  Earnings per share and dividends have doubled in recent years providing an attractive baseline component to shareholder returns.  Our prime assets enjoy occupancy rates close to 100% and attractive assured income flows, with lease lengths amongst the longest in our industry. Our debt structure is exceptional. Fixed interest costs of 5.3%, and average debt maturity of 13 years are complemented by interest cover at its highest levels in recent times. £2.6 billion of committed undrawn bank-lines round out the picture.  

Much focus is being applied on customer trends in the Retail and Office markets. In Retail, while a consumer spending slowdown and cost pressures are affecting the market, the impact to date is quite varied.  A number of Retailers are still reporting sales gains and resilient margins. Others are harder hit, especially in housing related areas. Our portfolio management of recent years has left us with little exposure to secondary retail and "bulky goods" trading. To date therefore our rents continue to grow, albeit more slowly, off high occupancy. We are however keeping close to our customers as the picture develops.  In the Office segment, the greater cyclicality of the market (exhibited by sharp rental rises in recent years) seems likely to be demonstrated by rental value weakness in 2008/9, though this is modest to date and forecast employment losses are mostly that - forecasts.  British Land's 98% Office occupancy rate and long leases substantially limit our cashflow exposure to rental value falls, though development prospects (8% of assets) and asset valuations will be impacted.

Investment markets remain volatile reflecting broader financial market repricing and uncertainty and the resultant deleveraging effects. Increasing investor interest in UK commercial property at these lower pricing levels is evident, but still patchy. There are few who fail to see value in sector share prices but many too focused on the near-term newsflow.

In general, prime property valuations in the UK have moved into territory we see as representing long-term "fair value". However it is likely that markets overshoot, focused disproportionately on the short-term outlook. In that regard, inflation concerns and the associated tension on long-term interest rates are an important factor, exacerbated in the last 8 weeks.  Real estate provides an inflation hedge through rising rents over the long-term, but short-term the relationship is less reliable.

We believe in British Land's strategy, resilience and prospects. We are determined to preserve future growth prospects from our assets, developments and capacity to make well priced acquisitions. However we are conscious that strong risk management is also a key asset at this stage in the cycle whilst broader economic and financial indicators remain unsettled.

In closing, may I offer thanks to Sir David Michels, who retires from our Board today, for his support and advice over the last 5 years and welcome Aubrey Adams and John Gildersleeve who join our Board on 1st September. May I also offer thanks to all British Land's staff for their unstinting efforts in these challenging times."

Media enquiries: 

British Land: Laura De Vere - Tel: [phone] Mobile: + 44 (0)7739 292920

Finsbury: Ed Simpkins - Tel: [phone] Mobile: + 44 (0)7947740551

 

END

 

 

AGMFKDKNOBKKFOD