British Land [LON:BLND] has received 82% of FY2021 rent so far this year, representing 99% of Office rents and 70% of Retail. 76% of March 2021 rent has been collected (Offices 96%, Retail 54%) and management expects this to improve over the coming weeks in line with previous quarters.
As of 12 April, following the relaxing of government guidelines, 79% of stores are open.
Retail lettings and renewals covered 1.4m sq ft in the 11 months to 28 February 2021, the same as the whole of FY20. However, deals were on average 20% below previous passing rent.
The group has pre-let 30% of the space at 1 Broadgate and demolition at the development site will begin in May. Planning has been secured at Canada Water, the headlease has been drawn down and enabling work on the first three buildings has begun.
British Land has £1.8bn in cash and undrawn borrowing facilities, and no re-financing requirements until 2025. The group has completed £1.2bn in sales since 1 April 2020 including £640m of mature office assets and £560m of retail assets.
British Land shares were broadly unmoved in early trading.
William Ryder, Equity Analyst at Hargreaves Lansdown commented “Rent collection is down almost a fifth on last year, although management expects some further improvement in the coming weeks. Overall the story hasn’t changed much – the vast majority of office space is paying rent while sections of the retail estate is struggling. Clearly, the reopening of society will be hugely important and should herald a recovery. However, we still don’t know how much habits have permanently been altered by the pandemic. It’s not yet clear that physical retail will ever fully recover, or that everyone will return to the office. We suspect the worst fears will be unfounded, but we’d be surprised if there were no enduring behaviour shifts.”
For now, British Land is continuing to focus on high quality developments and campuses, and we think this approach makes some sense. But the next few quarters will be crucial, as that’s when we’ll find out just how many of our lockdown habits become permanent.