British Land, which owns shopping centres including Sheffield’s Meadowhall and Drake Circus in Plymouth, has written down the value of its retail portfolio by more than a quarter due to the impact of the coronavirus.
The government’s implementation of a nationwide lockdown in late March helped push the company, which also owns office properties in London, to a £1.1bn loss for the year to the end of March. This compares with a loss of £320m the previous year.
“Like businesses around the world, in recent months our focus has been on responding to the unprecedented challenges brought about by Covid-19,” said Chris Grigg, the company’s chief executive. “This was already a difficult year for retailers, many of who have been severely impacted by the lockdown and the early effects of the crisis were reflected in the value of our retail portfolio.”
The company said it had lost £2m in rent by giving a three-month payment holiday to the end of June to smaller retail, food and beverage, and leisure customers. In addition, about £35m of rent payments have been deferred for customers facing financial challenges due to the spread of Covid-19. British Land said it collected 68% of rent owed in March, 97% from its London office sites, but just 43% from retail customers.
British Land said it was prepared for the reopening of businesses, with its retail parks “more conducive to mission-based trips and social distancing more easily managed”.
The company said the value of its office portfolio had risen by 2.3%, with 97% occupancy.
“Occupiers are working on plans to get back to the workplace and most feel that it is too early to make fundamental long-term changes around their requirements,” said Grigg. “However, we are mindful that the trend towards greater flexibility may accelerate following this prolonged period of working from home.”
The 26% fall in the value of British Land’s retail empire dragged down the value of its entire portfolio by 10%. Grigg said the impact of coronavirus was accelerating the company’s shift towards supporting online retail.
“We continue to believe there remains a role for the right kind of retail within our portfolio,” he said. “Especially assets that can play a key role for retailers in terms of fulfilment of online sales, returns and click and collect. This will particularly be the case for well-located open-air retail parks.”