British Land takes Meadowhall valuation hit
Published: 07 February, 2008
British Land has seen £80m wiped off the value of its Meadowhall shopping centre in Sheffield as the credit crunch continues to disrupt the investment market.
The company’s valuers marked the property down by 5.3 per cent to £1,500m over the three months to December 31, 2007, valuing the megamall off a net equivalent yield 5.17 per cent to on its ERV of £84m. Overall, they reported that investment yields on retail property moved out by 55bp over the quarter.
However in his quarterly report to shareholders chairman Chris Gibson-Smith attempted to put a positive gloss on the savage market downturn. “Macro-economic uncertainty and the global credit crunch have depressed property values,” he conceded. “However, the worst should now be behind us, though uncertainties remain on timing and extent of the correction. The exceptional quality of prime property cash flow is again representing clear value. We are optimistic about British Land's inherent strengths and ability to create value over the course of the business cycle.”
And the company said occupier demand for its retail assets remained relatively buoyant, pointing out that in the final quarter of 2007 it settled 30 retail rent reviews and exchanged agreements for over 60 new retail lettings covering more than 580,000 sq ft. On average these reviews and lettings achieved rents 4.5 per cent above the external valuer's estimates.
The new lettings included four agreements with Marks & Spencer at retail parks in Swindon, Edinburgh, Leeds and Glasgow for a total of 120,000 sq ft at £3.8 m pa.