11.1 per cent cut in retail valuations
British Land’s retail assets lost more than half a billion pounds in value over the year to 31 March 2019, according to its latest full-year results. BL’s retail portfolio value was marked down 11.1% to £5,577m, with ERVs down 3.8% and yields moving out by 37bps.
The year saw 1.6m sq ft of retal leasing activity at rents marginally ahead of ERV while occupancy remained relatively robust at 96.7%. However the company conceded it had taken a £16.9m annualised rental hit as a result of CVAs and administrations over the last two years. Total sales were 160 bps ahead of the national benchmark and footfall 230 bps ahead.
BL sold £646m of retail assets since April 2018, achieving better than book value on average. Standalone superstore exposure is down from 11% in 2014 to 1% today and overall retail is now under half of the business, down from 66% in 2010. Looking ahead, BL expects retail to comprise around 30-35% of assets in five years, so it will continue to sell assets.
Chris Grigg, Chief Executive said: “Looking ahead, retail is likely to remain challenging as structural change continues but there are early signs on parts of our portfolio, that some of the short-term operational headwinds impacting retailers are easing.”