British Land to exit mainland Europe as economic crisis bites
LONDON May 14 (Reuters) - Property developer British Land is looking to sell its 255 million pound ($391 million) portfolio of retail properties in mainland Europe after the assets lost almost a fifth of their value on the back of the economic crisis in Spain and Portugal.
British Land said on Tuesday its mainland European properties, which account for 2.4 percent of its 10.5 billion pound portfolio, fell 17 percent in value in the year to the end of March, hit by rental concessions and widening yields.
"Looking forward, we consider Europe to be a subscale business for us and our intention is to exit over time," Chief Executive Chris Grigg said, adding the company was not having active discussions with buyers at the moment.
"It could be a long haul, the market's not that easy in Europe at the moment and we don't expect any near-term announcement but this is a very clear statement of intent," he said.
British Land entered mainland Europe in 2005 with the purchase of Pillar Property, which had assets in Spain and Italy. It co-owns Spain's biggest mall, the 2.2 million square foot Puerto Venecia shopping centre in Zaragoza, and owns a 65 percent share in continental European property fund PREF.
Retail sales in the euro zone fell for the second month in a row in March, reflecting the bloc's high jobless rate and restricted credit conditions, with the worst slump seen in Spain where retail sales fell 10.5 percent on an annual basis.
Like its rivals Hammerson and Land Securities , British Land has been focusing on its core office and shopping centre businesses in London and key UK regions to combat the tough economic outlook facing property markets in Britain and Europe.
In March, it raised almost 1 billion pounds for new investments and developments via a share placement and sale of an office block in the City of London financial district.
The company, which is building the Cheesegrater skyscraper in the City, said its EPRA (European Public Real Estate Association) net asset value for the year to the end of March rose 0.2 percent to 596 pence per share, while profits before tax increased 1.9 percent to 274 million pounds.
It also increased its dividend by 1.1 percent to 26.4 pence a share.