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British Land Earnings Gain on Leasing, Higher Rental Income

November 20, 2012

British Land Co. (BLND), the U.K.’s second- largest real estate investment trust, said first-half profit rose 4 percent after it cut vacancies and raised rental income.

Profit excluding changes in asset values and one-time items increased to 136 million pounds ($216 million), or 15.2 pence a share, in the six months through September from 130 million pounds, or 14.6 pence, a year earlier, the London-based company said in a statement today. Net asset value was little changed at 596 pence a share.

Chief Executive Officer Chris Grigg has focused on boosting occupancy at the company’s retail properties and attracting enough tenants to planned developments to justify starting construction work. British Land plans to add 2.3 million square feet (214,000 square meters) of offices in central London through 2014 to benefit from an anticipated increase in rents and values.

“There’s nothing in these results that you can pick holes in - they’re pretty robust,” said Alan Carter, an analyst at Investec Securities who has a buy rating on British Land shares. “The market will eventually realize that it’s a more defensive place than Land Securities,” he said.

British Land was unchanged at 515 pence in London trading, giving the company a market value of 4.61 billion pounds. The stock has declined 5.2 percent during the past three months, while the 12-member FTSE 350 Real Estate Investment Trust Index (F3REITS) has dropped 2.2 percent.

New Chairman

Chris Gibson-Smith will step down as chairman of British Land effective Dec. 31 after six years, the company said today. John Gildersleeve will take over the post from Jan. 1.

The company said it leased 953,000 square feet of space during the six-month period, renewing or extending existing tenants’ leases.

Hedge fund Aspect Capital Ltd. agreed to lease 24,520 square feet at 10 Portman Square, near London’s Oxford Street, British Land said in a separate statement. Law firm Hill Dickinson LLP also agreed to rent 32,000 square feet at Broadgate Tower in the City of London, which British Land co- owns with funds managed by Blackstone Group LP. (BX:US)

Neither Aspect Capital nor Hill Dickinson was immediately available to comment.

Net rental income rose 2 percent in the fiscal half to 142 million pounds, lifted by rent increases, new leases, the expiration of tenant incentives and acquisitions.

London Purchases

British Land bought Clarges Estate in London’s Mayfair district for 129.6 million pounds during the period and plans a 191,500 square-foot residential and office redevelopment. British Land also agreed to pay 90 million pounds for a shopping center under construction in Hereford, west England, that’s scheduled to open in 2014.

The company agreed to or completed disposals that raised 235 million pounds in the six-month period, including the sale of stakes in seven food stores across the U.K. and a shopping center in Cambridge.

“The decisions we have taken in recent years are ensuring we are not only delivering good results today but also building growth into our portfolio for the future,” Grigg said in the statement.

Net income fell to 112 million pounds in the first half from 332 million pounds a year earlier as the value of British Land’s real estate stagnated.

The company will pay a dividend of 6.6 pence a share, in line with the payout it announced in May, when it presented full-year results. That brought the total first-half payout to 13.2 pence a share.

Net debt totaled 4.78 billion pounds, or 46 percent of the value of British Land’s real estate. That compares with a 45.6 percent loan-to-value ratio at the end of June.

To contact the reporter on this story: Simon Packard in London at

To contact the editor responsible for this story: Andrew Blackman at

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