Rising interest rates mean the existence of a gap between British Land’s share price and its net asset value is easy to justify. The bigger question is whether the sell-off in the shares now more than compensates for the risks of a more dramatic decline in property values and a fall in rents as inflation bears down on businesses.
The value of the London office landlord’s properties during the six months to the end of March declined by 3 per cent, driving the net tangible asset value down 4.4 per cent to 695p a share. More rate rises mean investors can expect the value of British Land’s estate to fall further. Peel Hunt expects to downgrade its forecast for net tangible assets at the end
