British Land lifts hopes of a turnaround as slide eases

Developer and landlord British Land today stoked hopes that the worst of the property slump is over but remained tight lipped over the expected sale of half its Broadgate office estate in the City.

The firm said the value of its property portfolio fell 3.7% to £8.2 billion in the first quarter of the year compared with drops of 9.2% and 13.3% in the previous two quarters.

Chief executive Chris Grigg also said £3.2 billion of assets, 39% of the portfolio, either increased or were unchanged in value since the start of the financial year in April.

"The pace of decline in our portfolio valuation has slowed markedly compared with the previous quarter," he said. "In fact we have seen over £3 billion of our assets either remain steady or increase in value."

It came as British Land reported first-quarter losses of £275 million against a deficit of £987 million in the previous quarter and £572 million in the first quarter last year.

Net asset value per share was down 9% to 361p, not as bad as feared, and another tentative sign that the battered property market is finally on the mend.

Shares in British Land, whose recent developments include 201 Bishopsgate and The Broadgate Tower, up 3.8p to 499.4p, having jumped nearly 10% last week on a series of takeover rumours.

It is also in talks to sell half of Broadgate, which fell 3.9% in value between April and June to £2.2 billion.

Many in the City expected a sale to US private-equity group Blackstone to be announced alongside today's results but no such agreement has been reached so far. British Land finance director Graham Roberts said: "There has been some speculation because we have always said that any of our assets are for sale at the right price. Broadgate is no exception and there has been some interest but there is nothing to announce today."

The value of the British Land estate has crashed by 41% since the peak in June 2007 and like rival firms it has been desperately trying to raise cash to repay debts. It sold a 50% stake in the Meadowhall shopping centre in Sheffield to London & Stamford Property for £588 million and raised £740 million in a rights issue in May.

Grigg, who replaced Stephen Hester after he left for Royal Bank of Scotland, said there was "a clear improvement" in interest among investors for prime assets, which helped slow the pace at which property values are falling.

However, he warned rents continued to drop.