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

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.