May 14 (Bloomberg) -- British Land Co., the U.K.’s second-largest real estate investment trust, said annual earnings rose 1.9 percent as tenants paid higher-than-expected rents on new leases.
Underlying profit before tax for the year through March increased to 274 million pounds ($420 million) from 269 million pounds a year earlier, the London-based company said today in a statement. The value of development projects climbed 12 percent.
British Land in March raised 493 million pounds in a share sale to spend on acquisitions and development as the U.K.’s biggest developers were able to access financing unavailable to smaller rivals. U.K. commercial real estate values fell for the 17th consecutive month in March, according to Investment Property Databank Ltd.
“Our access to low-cost financing is an important competitive advantage,” Chief Executive Officer Chris Grigg said in the statement. “Our core business will be resilient as we benefit from our focus on the better-performing markets in London and the Southeast and on high-quality retail around the U.K.”
British Land was down 1 penny, or 0.2 percent, to 620 pence at the 4:30 p.m. close in London, reducing its market value to 6.15 billion pounds. The shares have gained about 10 percent this year.
The value of the company’s European retail assets fell 17 percent to 255 million pounds as economies in the region faltered, British Land said. The REIT plans to sell its properties in Spain and Italy in the medium term, Grigg said in a call with reporters today.
“At the moment, we’re not having active discussions with buyers,” he said. “It could be a long haul. The market’s not that easy in Europe.”
The company’s portfolio includes Spain’s largest fashion mall at Puerto Venecia in the northern city of Zaragoza, which opened in October and is owned by a venture with Orion European Real Estate III Fund CV.
Earlier this month, British Land won approval to develop three sites with about 300,000 square feet (29,000 square meters) of office space in Shoreditch, a central London area that’s the center of the country’s high-tech industry, according to the developer.
Net income fell to 284 million pounds from 480 million pounds as the value of the company’s assets rose more slowly than a year earlier.
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