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British Land: Full year results
British Land reported good results for the year to March 2005. Underlying pre-tax profit grew 17% to £174.8m (before gains on asset disposals of £27m) and exceptional items. Reported pre-tax profits (before exceptional items) grew 8.5% to £202m.
Net rents increased by 9.3% to £571.8m, the portfolio valuation increased by 6.5% to £12.5bn. Net asset value per share grew 15% to 1111p (2004: 966p).
Gross rental income for the year increased by 9.6% to £619.9m while net rental income rose 9.3% to £571.8m. The bulk of the growth in gross rentals was due to expansion of the portfolio which contributed £33m to the increase.
Interest costs rose £15.8m to £352m due to higher levels of borrowings caused by acquisitions, a factor which also pushed up administrative costs. Net rents covered interest 1.6 times (2004: 1.5 times).
Administrative expenses, which fell last year, have risen by 17.5% (to £51.2m), due to increased staff and other costs following acquisitions as well as the recruitment of key staff. (The company spent £1,361m on acquisitions including 24 Debenhams stores (£516m), Queensmere & Observatory Shopping Centres (£192m) and 65 freehold pubs (£174m). British Land has seen the value of its new acquisitions appreciate by 7.2% since purchase.
Net cash flow from operating activities has grown by 21% to £462.2m due to growing rents and the effects of consolidating the former BL Universal JV for a full year.
The company’s portfolio is 55% retail (68% of which is out of town) and 39% offices (94% of which is in Central London). The relatively high level of exposure to retail property means that a decline in consumer spending is likely to affect rental growth. Central London offices are amongst the best placed to ride out a slow-down in the economy but nevertheless, rental growth has been slow last year.
The share trades at 873.5p, at a healthy 21% discount to NAV. The yield is 2%.
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