British Land Slashes Mall Values as Virus Accelerates Retail Woe

(Bloomberg) --

British Land Co. slashed the values of its stores and malls by more than a quarter as the coronavirus outbreak keeps already reluctant U.K. shoppers at home.

Write downs and asset sales stripped 1.7 billion pounds ($2.1 billion) from the landlord’s retail properties in the year through March, according to a statement on Wednesday. British Land is one of the U.K.’s biggest real estate investment trusts.

Retailers in the U.K. and around the world are struggling to adapt to competition from online rivals, a trend only accelerated by the lockdown measures many governments used to halt the spread of coronavirus. That shift is hurting landlords, who have had to contend with an increase in tenants going bust and adjust the rental values of their stores.

British Land collected less than half of the rent that was due from its retailer tenants in March, with the rest deferred, forgiven or delayed.

“With 12% of British Land’s retail rent remaining unpaid by major tenants, some harsh negotiations to lower rents are ahead,” Sue Munden, an analyst at Bloomberg Intelligence said in a note on Wednesday.

The firm is attempting to reduce its retail exposure, and has set itself a new target to cut its capital allocation to the sector below 30%. However, that may prove difficult as a lack of activity makes property sales harder.

“In retail, given current valuations and the lack of liquidity in the investment market, our focus is on delivering value though asset management,” British Land’s Chief Executive Officer Chris Grigg said in the statement.

The pressure is also mounting on rival property giant Hammerson Plc, whose CEO quit on Wednesday after more than a decade at the helm. David Atkins described the current environment as “the most challenging we have faced as a business.”

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