RE: BLND About To Breakout.........15 May 2015 16:40
<b>Boom time at British Land</b>
By Lee Wild | Thu, 14th May 2015 - 12:06
Property giant British Land (BLND) did exactly what was expected of it last year. Demand for commercial property is booming and net asset value (NAV) jumped by over 20%. A sharp rise in the value of its property portfolio helped generate a total accounting return of 24.5%, and growth prospects look underpinned by favourable economic conditions.
NAV per share grew from 688p to 829p in the 12 months to 31 March, in line with market forecasts, as the value of properties on the balance sheet jumped by £1.7 billion, or 12.1%, to £13.6 billion.
Low interest rates have fuelled the property boom, and there seems little likelihood of a rate rise soon. The "Cheesegrater" office block in Leadenhall Street, which British Land finished last July, is already receiving record rents for the City. The building is now 84% let or under offer, compared to 53% at the start of the year.
And a Conservative victory in last week's election could also be good for business this year, suggests the company. The prime Central London market softened in the run-up to polling day given the risk of a mansion tax on properties above £2 million. "The super-prime market moderated slightly, but we are continuing to see good demand for exceptional new build properties, such as Clarges Mayfair," it said.
Indeed, new records for sales have been achieved at the Clarges development where 22 out of 34 apartments have been sold at an average of £4,750 per square foot.
"We have a modern portfolio focused on the right locations; a strong balance sheet with a low cost of debt; and an exciting development programme," says chief executive Chris Grigg.
And the analyst community is certainly backing the business.
"The outlook is also robust with the twin positives of increasing employment in London and real wage growth supporting demand for London offices and regional retail respectively," says broker Panmure Gordon. "British Land is well placed to benefit from this with the retail portfolio fit to embrace the omni channel retail environment, superstore exposure reduced to 7% and the land bank positioned for future development."
British Land shares are currently nudging significant historical technical resistance levels at about 865-875p, but Panmure reckons its forecasts for 6% growth in NAV this year to 877p "looks light", and sticks with its 'buy' rating and 994p price target.
There's also a final quarterly dividend of 6.92p, which takes the full-year payout to 27.68p, with a further 7.09p proposed for the first quarter of 2016. There's a prospective dividend yield of 3.3%.
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