Dod101 wrote:...with the retail sector in turmoil ...
Dod
Well I could have chosen any number of quotes in this thread but settled for this one which seemed to best express the "mood" of, I guess, not just those here, but the market as a whole.
However, being a natural contrarian my interest is piqued by such doom and gloom. You would think from comments generally that BLND was overly exposed to the High Street, and retailing.
I wonder how many on here have actually read the latest annual report, recently published. Within it we learn that "Retail" comprises less than half the assets at 45%. Furthermore this is expected to be at around 33% within 5 years. This changing ratio is as much to do with the current pipeline of development projects coming on stream, as much as further retail disposals. The occupancy rate of this "overweight" of Retail portfolio was at 97% as at year end, hardly disastrous. Digging further into the Retail Portfolio's make up we discover that 85% of it is in what is termed "multi-let", not High Street at all, but locations of the like of Meadowhall. An empty let in such sites is readily replaced (reflected perhaps in the 97% occupancy), and not necessarily at lower rents either, although of course than can and does happen.
Multi-Let, and Mixed Use, are appropriate descriptions of these destinations, and although lumped together as Retail, these will also reflect the trend away from shopping, towards "experiences". Retail will include cinemas, gyms, wall climbing, trampolining etc. too.
To see the disastrous effect of the demise on the High Street on British Land it is interesting to read of the "collapse" last year in footfall at it's owned sites, by a whole 0.9%, and of sales by the astonishing quantum of 0.5%. Against competitors these figures are outperformers of 230bps and 160bps respectively.
So the shares are now at less than 550p, against a Net Asset Value last recorded as 905p, and a dividend of 31p (up on last year incidentally and as a REIT in ISA that is fully delivered, and covered by company income). Furthermore the company has decided to utilise its cashflows by further investing in property. In particular it has found a REIT that is trading at about 60% of NAV, that is biased to London and the South-East with a successful history of delivering profitable development projects, and is buying such shares regularly from sellers. In other words it is also undertaking a share buy back.
Now of course things could all turn out for the worse, and investing here prove to be questionable in hindsight on both a short and long term perspective, but that is true of many investments (particularly as most here will know of high yield = high(er) risk type shares). For me though I can't help but be attracted to such scenarios where the asymmetry exists where everyone seems to "know" how a simple story of Retail disaster will pan out, as opposed to a possibility where it might not turn out to be so bad after all.