HSBC upgrades British Land to 'buy'
Analysts at HSBC upgraded real estate investment trust British Land to 'buy' on Wednesday, noting that its first-half results had further rubber-stamped its "enviable position in the London campus market".
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With campuses now accounting for roughly 80% of British Land's investment in offices, and around 40% of its total portfolio, HSBC said it liked the trust's "proactive stance on reshaping its retail portfolio".
HSBC also highlighted that "two evolving value-creators" were set to emerge - one at the trust's 53-acre site in Canada Water and a second in the form of British Land's emerging private rental business with 4,000 to 5,000 potential residential unit opportunities across its portfolio.
However, although HSBC said stability seemed to be returning to land values and rents, the bank still struggles to see how a "post-Brexit 2019/20 London office market can improve materially from current levels", leading it to lower its target price on British Land to 667p from 678p.
"Reducing the weighting in retail while creating value from Canada Water and a new PRS business has the potential to re-rate and be accretive to the existing strong performance from the London campuses portfolio," said HSBC.