May 17, 2017 / 10:52 AM / 2 years ago

RPT-UPDATE 1-British Land cuts amount of speculative building

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May 17 (Reuters) - Property company British Land said it had reduced the amount of space it was developing before securing tenants to below 4 percent, adding that its London office customers were taking longer to make decisions on moves.

Britain’s second-largest listed developer, which owns Sheffield’s Meadowhall shopping centre and office developments at Paddington Central in London, said it expected uncertainty in the property market to persist for “some considerable” time as Britain negotiates its exit from the European Union.

Financial firms, large occupiers of London offices, need a regulated EU subsidiary to offer their products across the bloc, which could lead some to move work out of Britain if it loses access to the single market.

Against this backdrop, a Deloitte survey published on Wednesday showed that 3.9 million square feet of space was completed over the six months to March 31, marking the highest amount delivered in central London since 2004.

The survey, which showed that a further 28 new construction projects were started in the period, also said that the amount of empty office space in London has jumped over the past 15 months and was likely to rise further this year.

British Land said on Wednesday the amount of space it was building without secured tenants was cut to reduce its exposure to such higher risk projects in what it termed as “uncertain markets”. The figure had been five percent six months ago.

“London occupiers, particularly financial institutions, are making contingency plans but there is a wide range of possible outcomes here,” it said.

The company’s underlying profit jumped 7.4 percent to 390 million pounds ($504 million) in the year ended March 31, but its EPRA net asset value - a key industry metric that reflects the value of a firm’s buildings - slipped 0.4 percent to 915 pence per share.

British Land sold off property worth 1.5 billion pounds during the period, including the disposal of its 50 percent stake in London’s famed Leadenhall Building, known more popularly as the Cheesegrater because of its distinctive shape.

The deal, struck earlier this year and that fetched the company and Oxford Properties 1.15 billion pounds collectively, is expected to close this month.

The company also announced a final quarterly dividend of 7.3 pence, up 3 percent, and proposed a first-quarter dividend of 7.52 pence.

Its shares dipped 1 percent in early trade. ($1 = 0.7744 pounds) (Reporting by Esha Vaish in Bengaluru; Editing by Louise Heavens and Keith Weir)

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