Barclays downgrades British Land ahead of results

British Land was under the cosh on Friday after Barclays cut its stance on the stock to 'underweight' from 'equalweight' ahead of the company's full-year results next week.

The bank also cut its price target on British Land by 14% to 500p. In the same note, it trimmed its price target for Landsec by 4% to 755p while retaining its 'underweight' rating on the stock.

Barclays said that while it was taking a slightly less negative view on the London office market given the observed underlying resilience, it expects further, and accelerated, weakness in the retail portfolios to put further pressure on both earnings and NAV estimates.

"We now expect flat earnings growth for British Land and Landsec going forward as positive contributions from the development pipeline are offset with a more bearish outlook on rental growth for retail," it said.

"Moreover, we expect write-downs in the retail portfolio to accelerate and near term NAV estimates to come down as a result (BLND -7%, LAND -4%)."

This effect is more pronounced for British Land, Barclays said, given its higher exposure to the challenged retail warehouse segment, which accounts for around 25% of the company’s total portfolio.

Landsec's retail portfolio is more exposed to higher quality Central London retail and hotels, it said.

At 1350, British Land shares were down 3.2% at 565.60p and Landsec was down 1.7% at 897.60p.