UK property major British Land has warned that the credit squeeze may be spilling over into the commercial property sector. Ceo Stephen Hester struck the note of caution as the second-largest real estate investment trust (REIT) in the UK posted results showing that underlying profits were up 7% to £76 mln (EUR 112 mln). Pre-tax profits before assets disposals and the REIT conversion charge were slashed to £266 mln, down from £500 mln last year. British Land's net asset value rose 3% to £17.30 a share in the second quarter of this year. However, the company's shares were trading at just above £12 in recent days.
UK property major British Land has warned that the credit squeeze may be spilling over into the commercial property sector. Ceo Stephen Hester struck the note of caution as the second-largest real estate investment trust (REIT) in the UK posted results showing that underlying profits were up 7% to £76 mln (EUR 112 mln). Pre-tax profits before assets disposals and the REIT conversion charge were slashed to £266 mln, down from £500 mln last year. British Land's net asset value rose 3% to £17.30 a share in the second quarter of this year. However, the company's shares were trading at just above £12 in recent days.
Acknowledging investor concern about the potential impact of a credit crisis on the property sector, Hester said the situation could work in British Land's favour. 'More difficult credit conditions are likely to lead to fewer new buildings being put up because some people will find it harder to raise the money and be more nervous about finding tenants.' British Land, in contrast, can keep building thanks to a secure supply of fixed-rate debt funding and high occupancy rates, he said.
