British Land resumes dividend

The commercial landlord reported an improvement in retail footfall, but its offices are still mostly empty

Commercial landlord British Land will resume paying dividends after reporting an improvement in footfall and rent payments. 

The FTSE 100 company will pay out dividends twice a year, set at a level of 80pc of underlying earnings, with the first payout in November. Prior to the pandemic it paid out four times a year to shareholders. 

It came as British Land reported footfall at some of its retail sites was nearly a fifth ahead of its estimates, with especially strong numbers in retail parks, which make up nearly half of its shopping sites. Sales from its retail sites are now back to 90pc of their level a year ago, it added. 

Only half of retail space rent was collected for September, but this marked an improvement from June when only 36pc was received. Across its total estate of offices and shops, British Land collected 72pc of rent in September, although this figure could rise as it continues to chase tenants. 

British Land revealed it had lost £11.6m in annualised rent via company voluntary arrangements (CVAs), which allow tenants to rewrite their leases if they can get approval from three-quarters of creditors. Sixteen occupiers are operating on agreed terms on CVAs, with 77pc operating on reduced rents and 16pc having closed altogether.

Fewer than one in five London office workers have returned to their desks according to British Land’s data, but 95pc of offices in the capital are currently let out.

Despite workers being unenthusiastic to return, office rent payments remain strong with 97pc of rent collected in September. 

The company said: “Longer term, Covid-19 will undoubtedly cause many businesses to consider how to use their space most productively, but our conversations suggest there is a consensus that high quality office space will remain key to enable them to perform at their best.”

British Land shares rose 5pc in noon trade to 385.50p.

Analysts at Jefferies said the new dividend payout ratio “looks a more sustainable level than pre-Covid”.

RBC analysts said the change in payout policy “should allow British Land greater freedom to undertake more development and make more disposals”.

“We believe the change reflects the challenges management have faced in recent years in selling retail property as fast as they would have liked and indicates a potentially faster pace going forward,” they added.

Nicholas Hyett, Equities Analyst at Hargreaves Lansdown urged caution. “It’s quite something when being underpaid by 25pc is considered a success, but the fact British Land’s shares have bounced this morning is testament to the state the commercial property industry is in.” He added there was “an undercurrent of uncertainty and fear running through the statement."