British Land suffers valuation slump and Taylor Wimpey sees reduction in cost pressures

“Donald Trump’s speech on Tuesday failed to give investors the information they wanted on trade policy and so we’ve got another down-day for UK and European equities,” says Russ Mould, Investment Director at AJ Bell.

“Investors had hoped they would get some clarity on the potential rollback of tariffs. Disappointment on this front, together with heightened tensions in Hong Kong, has served to damped investor appetite for equities.

“The FTSE 100 fell by 0.5% with miners, banks and utilities down. The FTSE 250 retreated by 0.6% with energy stocks very much out of favour."

British Land

“A near-£600 million reduction in the value of British Land’s portfolio illustrates the troubles still gripping the property sector. Unsurprisingly its high street assets slumped in value the most as retailers continue to struggle with weaker footfall.

“It is a terrible time to be a retail property investor with asset valuations still in decline and tenants asking for every bit of help they can get.

“British Land doesn’t believe the situation will get better any time soon so its challenge is to try and sustain current occupancy levels and not have any more of its shops sitting idle and not earning any rent.

“Like many of its peers, British Land is trying to reduce its exposure to retail and have a more diverse business. Impressively, it is managing to sell assets above book value.

“The future for the business is mixed-use assets, with British Land saying there is a blurring of boundaries between work and leisure time and so people want to be able to socialise near to their office.

“So while there are clear weak spots, management remain optimistic about weathering the storm, particularly with high occupancy levels with its London offices.”

Taylor Wimpey

“The key takeaway from Taylor Wimpey’s latest trading update is that the housebuilder says build cost inflation is starting to soften and that this trend will continue in the coming months.

“This is significant as the combination of rising costs and stalling house prices have been putting pressure on the profitability of the wider industry and led the market to question its shaky foundations.

“The disappointment is that these cost pressures are not yet easing rapidly enough for Taylor Wimpey to maintain its previous margin guidance, even if overall guidance is maintained.

“A strong balance sheet means Taylor Wimpey is likely to plough ahead with plans to return upwards of £600 million to shareholders in dividends next year regardless of the backdrop.

“Like its peers the business is likely to be watching the outcome of the general election in December with interest, hoping that if the Conservatives achieve a majority they might then cut stamp duty and potentially boost demand for new homes.”

These articles are for information purposes only and are not a personal recommendation or advice.