|Bid||5.12 x 300000|
|Ask||5.26 x 300000|
|Day's Range||5.07 - 5.07|
|52 Week Range||3.58 - 7.74|
|Beta (5Y Monthly)||1.31|
|PE Ratio (TTM)||18.52|
|Forward Dividend & Yield||N/A (N/A)|
|Ex-Dividend Date||Mar 26, 2020|
|1y Target Est||N/A|
European stock markets are set to edge higher Thursday as the region continues to reopen for business, but gains will be limited amid rising tensions between the U.S. and China over Hong Kong. At 2 AM ET (0600 GMT), the DAX futures contract in Germany traded 0.5% higher. France's CAC 40 futures were up 1%, while the FTSE 100 futures contract in the U.K. rose 1.2%.
Upheaval in the retail sector, accelerated by coronavirus, has wiped more than £1bn off the value of British Land’s portfolio. The FTSE 100 property company owns about £11bn worth of property, including key sites in Broadgate, east London, and Paddington in west London. Just over a third of that — £3.9bn — is made up of retail parks, stores and shopping centres, which have shed more than a quarter of their value over the year.
(Bloomberg Markets) -- Nestled in a bed of the River Thames between London’s twin financial districts, Canada Water is about to become a testing ground for the future of real estate in a post-Covid-19 world.After more than a decade assembling a parcel of land almost double the size of New York’s Hudson Yards, developer British Land Co. expects to start construction this year on a multibillion-pound neighborhood of office buildings, homes, and shops at a time of dramatic change in how people work, live, and buy.“The pattern of work—how we work, when we work—you have got to feel there is going to be a shift at a much greater pace,” says Emma Cariaga, co-head of the Canada Water project at British Land. “We are going to have to be much more nimble.”It didn’t take a virus to force developers to think about a different way of operating. But now the future of real estate is on fast forward.With commercial real estate no longer a passive investment in which landlords could sign up long-term tenants and then sit back and collect rent, investors and developers are being pushed by a series of disruptions to become much more active. Amazon.com Inc. has stolen footfall from malls. WeWork Cos. redefined the office. Airbnb Inc. challenged the very idea of hotels. Now the Covid-19 pandemic is leading companies to rethink their need for communal workspaces.In London’s commercial real estate market, an early adopter of long leases to appeal to investors, the length of office rental agreements had already been falling steadily for two decades. Average lease terms declined from 21.7 years in 1996 to about 5.5 years in 2017 and 2018, according to data compiled by Colliers International Group Inc. In Canary Wharf, the East London financial district that’s home to the European headquarters of several global banks, the average lease is still about 10 years.The pandemic forced employees to stay away from those headquarters and work at home instead. Many companies found the transition surprisingly smooth, and executives have publicly questioned how much real estate their companies need. Can modern office towers be adapted without forcing thousands of employees to share elevators? When will it be safe for workers to commute together into major metropolises? These questions are increasingly urgent for real estate investors.Before the coronavirus crisis, “tenants were asking for more flexibility and service, but most landlords refused to give tenants what they wanted,” says Dror Poleg, author of Rethinking Real Estate and co-chair of the Urban Land Institute’s New York Real Estate Technology and Innovation Council. “Landlords will now be willing to take on more of this risk, because they simply no longer have a choice. When your building is suddenly 20% to 30% empty, you become much more open-minded about a lot of things.”This change could mean landlords will offer smaller so-called core offices on long leases, topped up with additional space that can be rented for shorter periods as needed, Cariaga says. For stores and restaurants, landlords may begin to calculate rents based on the turnover generated by each unit, rather than insisting on fixed leases.Rework the PlanIn the office market, WeWork introduced some of the changes likely to become more widespread: flexible rents, shared resources, advanced technology, design, and customer service. Plagued by questions about its management and financing, WeWork had to call off an initial public offering, and the company is likely to be tested further by the economic fallout from Covid-19. But there’s a growing sense among real estate investors that elements of its model point the way to the future, offering customers a cheaper and more convenient product.“The fallout of WeWork doesn’t mean the business model isn’t entirely viable. There are other operators coming that I think could get it right,” says Hugo Machin, co-head of global cities at Schroders Plc. He uses an analogy from the early days of mobile phones: “Is WeWork the Nokia of the office world, and an Apple product is just around the corner?”British Land has already moved to embrace more WeWork-like flexibility, offering short-term offices within small parts of its large London campuses. That’s likely to be a prominent feature of Canada Water, too. The project’s master plan includes a traditional town center with about 50 potential store and restaurant units. “Do I think we’re going to offer 50 leases to businesses that are all going to take a five-year term and be happy to be on their way? Not a chance,” Cariaga says. “We are going to have to become almost a department store-type operator, allowing retailers and restaurateurs to come and go much more than we have historically. Our role as landlords is going to be a much more intensive one than it has been before.”Location, Location, DislocationThis new way of doing business will require more operational skill and risk and a different approach to financing and underwriting property. “When I arrived here, I was used to thinking about credit risk,” says Chris Grigg, a former banker who became British Land’s chief executive officer in 2009. “Yet people seemed very content that if they had a 20-year lease, that it was good for 20 years. That is OK until the [tenant] company goes bust.”Contrary to previous crises, the pandemic has affected all real estate investors, not only those with too much leverage or properties leased to high-risk companies. The widespread shutdowns have imperiled corporations with strong credit ratings and buildings rented on long leases.That’s a shock for investors who’ve allocated growing shares of their portfolios to real estate because the asset class supposedly provided secure income and diversification from the stock market.“Covid-19 is going to highlight to investors and managers that their ability to underwrite isn’t purely governed by location, location, and a bit of income risk,” says Adrian Benedict, head of real estate solutions at Fidelity International. “If real estate is not seen as a stable source of income, you question the rationale for holding it.”Sidders and Wong report on real estate for Bloomberg News in London and New York, respectively.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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Sign up here.Faced with the choice of accepting rent cuts or hunting for new retailers to fill hundreds of stores, U.K. mall owners are swallowing their medicine.Some of Britain’s biggest commercial landlords including Hammerson Plc and British Land Co., voted in favor of a rescue plan for billionaire Philip Green’s Arcadia Group that meant having to accept dozens of store closures and rent cuts of at least 25% at almost 200 sites.But their approval for the so-called Company Voluntary Arrangement was grudging and highlights how much pressure they are under from the pain inflicted on retailers by consumers choosing to shop online rather than in department stores.Land Securities Group Plc, Standard Life Aberdeen Plc and the Crown Estate had intended to vote against Arcadia’s proposals and switched at the 11th hour, according to people familiar with their plans who asked not to be named discussing information that isn’t public. One landlord, Intu Properties Plc, voted against, calling the deal unfair to tenants that pay full rent.“It really is like being stuck between a rock and a hard place,” said Daniel Swimer, property litigation partner at law firm Joelson. “Landlords could have rent reductions forced upon them or, if the CVA doesn’t get passed, they’re left with a large retailer failing in the current retail climate.”Deal ApprovedThe fact the deal was approved is likely to put further pressure on mall rents and values, and raises the possibility that commercial property owners could be tipped into a crisis similar to that faced by the retailers who make up some of their biggest tenants.The cost of insuring Land Securities’ debt against default saw the biggest daily rise since December on the day after the Arcadia vote, according to ICE Data Services. Moody’s Investors Service warned of possible damage to the creditworthiness of retail property owners that already face “weak operating performance, with declining footfall and retail sales, and downward pressure on rents.”The landlords came under pressure from Arcadia to back the deal or put about 18,000 jobs at risk if the company was forced into administration, people with knowledge of the negotiations said. Several were told they would be shirking their social responsibilities and be blamed for job losses, an accusation they resented, some of the people said, asking not to be identified as the talks were private.Arcadia representatives declined to comment.Ultimately the decision to back the CVA came down to the best commercial interests of the landlords, given that they could be left with empty sites if Arcadia fell into administration, two of the people said.Spokesmen for Land Securities, the Crown Estate and Standard Life Aberdeen confirmed they had backed the plans but declined to comment on the detail of the negotiations. Representatives of Hammerson and British Land declined to comment.Smaller CutsWhile many companies have preceded Arcadia’s CVA, few have been so large and many secured less generous rent cuts. The risk is that following Arcadia, other retailers now demand the same, even those that have previously undertaken rent cuts.“There’s nothing to stop companies coming back for a second bite,” Andrew Hughes, head of European general retail at UBS said at a media briefing last month.Intu has previously highlighted the likely impact of Arcadia’s CVA, saying last month that store closures are worse than expected and it sees net rents falling 4% to 6% this year. The company, which owns eight of the top 20 malls in the U.K., is under pressure itself to sell assets to cut debt and CVAs are hampering those efforts.Falling ValueIntu said in February that a further 10% fall in the value of its properties would cost 1 million pounds in extra expenditures in order to avoid a breach of loan covenants. U.K. Retail property values fell 10.25 percent in the year through May, according to data compiled by broker CBRE Group Inc.Some landlords are pushing back on department store chain Debenhams’ outlet closures which won creditor approval in May. Sports Direct International Plc has grouped together with landlords to challenge the CVA and property investor M&G Investments has launched another challenge, a spokeswoman for the asset manager confirmed.But it will be hard for landlords to stop the trend. Consumers’ shift to online shopping shows little signs of abating and insolvencies have jumped by more than a fifth since 2016, with more than 1,200 retailers collapsing last year.“What is 100% certain is that retailers can’t carry on paying the rents they have historically,” said Richard Hyman, an independent retail consultant. “There’s less money in the pot to fund it and the pain has to be shared by the landlord as well as by the retailer.”\--With assistance from Antonio Vanuzzo.To contact the reporters on this story: Katie Linsell in London at firstname.lastname@example.org;Jack Sidders in London at email@example.comTo contact the editors responsible for this story: Vivianne Rodrigues at firstname.lastname@example.org, Chris Vellacott, Shelley RobinsonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.