10% fall in value of British Land’s portfolio

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by Lin Freestone

British Land, the UK’s second largest commercial property company, has written down the value of its shops and offices by £1.9bn.

The decline in British Land’s property values slowed in the final quarter to the end of March, but the company has warned of a further decline in property values for the year ahead.

A net loss of £1.56bn was recorded for the year to the end of March 2008. In 2007 the company recorded a profit of £2.45bn.

Taking into account property disposals and a 10% annual markdown in the value of its assets, the value of British Land’s property at the end of the financial year was £10.47bn, down from £13.48bn last year.

British Land is heavily exposed in the turbulent City of London commercial office sector. Its largest City development is the Broadgate Estate, which consists of 15 office buildings and a site where it is developing 201 Bishopsgate and The Broadgate Tower.

When completed, British Land will own 4.8 million sq ft of Grade A office space on the Broadgate Estate.

There is growing evidence that City job losses and a slump in consumer demand has already hit rental demand. British Land’s properties are 99% let.

British Land also has a 10.8% stake in the docklands developer Canary Wharf Ltd, which was written down by 27.5% to £185m.

The company’s large retail property holdings include the Meadowhall shopping centre in Sheffield. This carries a current valuation of £1.5bn, which is £160m less than it was a year ago.