British Land Reports Strong HY26 Trading Update with AI Demand and Rental Growth

British Land’s HY26 trading update: rental growth, AI tenant demand and firmer valuations

British Land has posted a confident trading update for the six months to 30 September 2025, leaning into strong demand for prime London office campuses and near full retail parks. The company signed 1.4m sq ft of leases at 5.3% above ERV and expects FY26 Underlying EPS of at least 28.5p, with at least 6% growth projected for FY27. Valuations rose 1.2% in the half as yields held steady and rents pushed on, delivering a total accounting return of 4.0%.

The tone is upbeat: office attendance is rising, retailers are expanding out of town, and supply remains tight. There is also a growing AI and life sciences thread in the leasing mix, particularly at Regent’s Place, which British Land is repositioning as a science and technology campus.

Key numbers investors should know

Underlying Profit	£155m (HY25: £143m)
Underlying EPS	15.4p (HY25: 15.3p)
FY26 EPS outlook	At least 28.5p
FY27 EPS outlook	Growth of at least 6%
ERV growth (six months)	2.4% overall
Like-for-like net rental growth	4% group, 7% campuses, 2% retail & LUL
Valuation movement	+1.2% (Retail & London Urban Logistics +1.6%, Campuses +0.9%)
EPRA NTA	579p (FY25: 567p)
Total Accounting Return	4.0% for HY26
Portfolio occupancy	Campuses 92% (EPRA 88%), Retail 98% (retail parks 99%)
Leasing signed	1.4m sq ft, 5.3% above ERV
Under offer	1.3m sq ft, 7.5% above ERV
Capital recycling	£59m disposals at 5% above book; £52m acquisitions at 8.5% topped up NIY
NEY	6.1% (stable)

Prime London campuses: occupancy up and AI-led demand gathering pace

Campus leasing delivered 0.5m sq ft at 3.0% above ERV, with a further 0.6m sq ft under offer at 6.0% above. EPRA occupancy rose by over 500bps to 88%, or 92% on the headline measure, helped by a strong summer of activity. Broadgate is almost full, with only one floor available excluding on site developments.

The tenant mix is evolving. Since April, British Land has leased space to 11 AI-led businesses including Collibra, ContractPodAI, Juvenescence, Relation Therapeutics, Sierra and StackAdapt, alongside the Synthesia letting announced in February. At Regent’s Place, 49k sq ft has gone to science and technology occupiers, and the 1 Triton Square innovation scheme launches today with several negotiations in train. This is exactly the kind of emerging demand the company has been positioning for.

Developments are moving through too. Norton Folgate is 81% leased, under offer or in negotiations, and the Aldgate build to rent scheme is 80% let. Management still expects both to be fully let by year end. Most remaining vacant offices are new or freshly refurbished, which should help conversions in the second half.

Retail parks and London urban logistics: tight occupancy and pricing power

Retail parks remain star performers. The portfolio is practically full with 99% occupancy across c.1,200 units, and the wider Retail and London Urban Logistics segment recorded 0.9m sq ft of leasing at 7.3% above ERV. A further 0.7m sq ft is under offer at 9.5% above. Like-for-like net rental growth was 2% given the already high occupancy and rack rented status of many units, but the company expects the portfolio to become increasingly reversionary as market rents keep rising.

On the investment side, British Land acquired principally two retail parks for £52m at an 8.5% topped up NIY, while disposing of £59m of assets at 5% above book. The tilt toward high-conviction retail parks and urban logistics continues, with recycling supporting earnings and returns.

Valuations firm as ERVs rise and yields hold

With yields stable, ERV growth did the heavy lifting on valuations, taking them up 1.2% in the half. Retail and London Urban Logistics rose 1.6% and Campuses 0.9%. EPRA Net Tangible Assets increased to 579p from 567p at year end, and the group delivered a total accounting return of 4.0%, which sits neatly within the stated 8-10% p.a. target for the full year.

Net equivalent yield held at 6.1%. That stability matters. If yields stay put while rents grind up, it is supportive for both earnings and NAV. Conversely, any yield expansion would work the other way, so the balanced message here is reassuring but worth monitoring.

Earnings, guidance and what is driving the upgrades

Underlying EPS came in at 15.4p for the half, a touch ahead of last year’s 15.3p, despite higher funding costs. Management says like-for-like rental growth of 4%, development leasing and lower admin expenses offset those funding headwinds.

Looking ahead, the company now anticipates FY26 Underlying EPS of at least 28.5p and projects at least 6% growth for FY27. It also reiterates ERV growth guidance of 3-5% p.a. across the portfolio and says it is comfortable with current market expectations. This is a constructive setup for income-focused holders.

What looks positive, and what to watch

• Positives: Leasing momentum is strong at both campuses and retail parks, achieved rents are reliably ahead of ERV, and AI and life sciences demand is clear and growing. Occupancy is rising, developments are leasing, and valuations are nudging higher with yields steady.
• Watch-outs: EPRA occupancy at campuses is 88% and still needs further grind. Performance benefitted from surrender premia and other one-off items, which were positive and in line with HY25, but not structural. The sizeable pipeline under offer is not yet signed. Funding costs are higher, even if partially offset elsewhere.

Why this update matters for British Land shareholders

British Land is executing on a simple playbook: concentrate on supply-constrained prime London campuses and near full retail parks, push rents, and recycle capital into higher yielding assets. The HY26 delivery backs that up, with 1.4m sq ft signed at premiums and another 1.3m sq ft under offer at even wider uplifts. If ERV growth continues and yields stay put, the path to the stated total accounting return of 8-10% p.a. looks achievable in the near term.

For context, British Land owns or manages £14.6bn of property (£9.5bn on a British Land share basis) as at 31 March 2025, so small improvements across the estate can move the dial. Today’s message is about momentum and mix. There is more to do on occupancy, but the demand picture and pricing power both look favourable.

Jargon buster

• ERV: Estimated Rental Value. The rent a property could achieve today on the open market.
• EPRA occupancy/NTA: Standardised industry measures. EPRA occupancy is a consistent occupancy definition. EPRA Net Tangible Assets (NTA) is a NAV-style per share metric.
• NEY: Net Equivalent Yield. A property valuation yield that blends initial and reversionary income.
• NIY (topped up): Net Initial Yield adjusted to reflect the end of any rent-free periods or top-ups.
• TAR: Total Accounting Return. Change in EPRA NTA plus dividends, expressed as a percentage.
• Like-for-like rental growth: Rent growth on properties held throughout the period, excluding acquisitions and disposals.

Note: Occupancy figures marked with [1] exclude developments completed in the previous 12 months.