UPDATE 1-British Land's asset value jumps as UK property market recovers

Wed May 14, 2014 4:31am EDT

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By Brenda Goh

LONDON May 14 (Reuters) - British Land, developer of London's "Cheesegrater" skyscraper, said it was starting to benefit from a long-awaited recovery in Britain's commercial property markets, as it posted a 15 percent jump in full-year net asset value.

The firm, Britain's second-largest listed property company after Land Securities, has been selling off mature assets and raising finance to replenish its development pipeline, particularly in London and south-east England, where it has invested 1.3 billion pounds ($2.2 billion).

Its moves come as investment and leasing demand for Britain's shops, offices and industrial properties begin to bounce back after years of steady decline, with capital values rising 5.4 percent over the six months to March, according to data from research firm Investment Property Databank.

"We are well positioned to take advantage of London's continuing success and improving demand for the best retail space," said Chris Grigg, chief executive of the company, which has a portfolio mainly made up of retail properties across Britain and London offices.

"In London, we see rental growth along with the letting up of completed development space being the key drivers of our Offices performance ... In Retail, away from London, investor appetite is strengthening and retailers are clearly more confident about the outlook for consumer spending," he said.

The improving economic outlook helped its EPRA net asset value (NAV) per share, a key measure of industry performance, to rise to 688 pence per share over the year to the end of March, from 596 pence in the previous year, with much of the growth coming in the second half of the period.

Morgan Stanley analysts said British Land's results beat their expectations. "While we worry that NAV growth will start decelerating, we think the group is in good shape to deliver double-digit returns in the current financial year, which should sustain NAV valuation," they said.

British Land said it would pay a quarterly dividend of 6.75 pence a share, bringing the full-year payout to 27 pence, up 2.3 percent from the previous year.

($1 = 0.5939 British Pounds) (Editing by James Davey and Mark Potter)

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