British Land battles Brexit by lining up ‘chunky’ deals
British Land flagged up a clutch of “chunky” London leasing deals in the pipeline on Thursday, despite “potential headwinds” from Brexit.
The company’s shares are 20% down since last June’s referendum but the developer and landlord said it was in talks with 10 occupiers taking up potentially 1.4 million square foot of space across its three London campuses at Broadgate, Paddington and Regent’s Place near Euston.
“We’re having a number of talks — a couple have dropped away, but they’ve been replaced by others and we’ve made substantial progress with the ones that are ongoing,” chief executive Chris Grigg said.
“There’s some chunky old deals potentially in there which, if we pull them off, will be good for us and reassuring for the market.”
Tenants are in a position to drive a harder bargain, however, amid Brexit uncertainty, forcing landlords to offer longer rent-free periods on leases.
He added: “Since I’ve been in this job I’ve never found anybody who’s woken up and wants to pay me more money… A year ago we saw evidence of rising rents — that’s certainly flattened off.”
Some City analysts still have their doubts and shares dipped 12.75p to 605.25p.
Liberum Capital’s David Brockton warned: “In an uncertain period for UK commercial real estate, British Land is more exposed to risk than its closer peers: its higher proportionate exposure to City Offices could underperform as occupier demand gradually softens, the EU referendum implications are resolved and new supply materialises. Legacy single-let non-core retail is also susceptible to occupier weakness.”
British Land is also behind the biggest property deal of the year so far, selling its 50% stake in the City’s Cheesegrater tower for a reported £500 million.
