British Land Profit Falls After Property Values Increase at Slower Rate

British Land Co., the U.K.’s second- largest real estate investment trust, said full-year profit fell 26 percent after the company’s malls and office buildings appreciated at a slower rate.

Net income for the year ended March 31 fell to 840 million pounds ($1.4 billion), or 95.2 pence a share, from 1.14 billion pounds, or 132.6 pence, a year earlier, the London-based developer said today in a statement. British Land was expected to earn about 82 pence a share, the average estimate of seven analysts in a Bloomberg survey.

The value of British Land’s real estate rose 6.9 percent in fiscal 2011, less than the previous year’s 13.5 percent increase, as a recovery in the commercial property market slowed. The company’s biggest U.K. competitor, Land Securities Group Plc, reported a 14 percent gain in earnings last week.

“British Land’s results look pedestrian” compared with those of Land Securities, Graham Jones, an analyst at Arbuthnot Securities, said in a note to investors. Jones doesn’t have a rating on the stock.

British Land fell as much as 3.8 percent in London, the biggest decline in six months. The shares were down about 3 percent at 575 pence at 9:30 a.m. in London, more than the FTSE 100 Index’s 1.6 percent drop. They’ve gained about 19 percent in the past six months.

Cheesegrater Tenant

The REIT is spending 1.1 billion pounds to build 2.2 million square feet (204,000 square meters) of office properties in central London by 2014, to take advantage of a shortage of space. Chicago-based insurance broker Aon Corp. (AON) last week agreed to become the first tenant in the skyscraper known as the Cheesegrater, which British Land is developing with Toronto- based Oxford Properties Group Inc. in the City of London financial district.

“Our strong letting performance across our portfolio shows clearly that there is still demand from occupiers for the well- located prime retail and London office assets,” Chief Executive Officer Chris Grigg said in the statement.

To contact the reporter on this story: Tom Bill in London at tbill2@bloomberg.net.

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net.

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