British Land has seen its underlying profit creep up by 2% to £268m in the second half of its financial year, as the group looks to focus its strategy on campuses, retail parks and London urban logistics.

The developer and operator said its underlying earnings had also increased by 1% to 28.5 pence per share.

The group increased its average book value by 11% in this period, with disposals totalling £410m.

The announcement comes after British Land sold its 50% stake in Meadowhall shopping centre in Sheffield for £360m, while acquiring Westwood retail park in Thanet for £55m, at a net initial yield of 8.1%.

Chief executive officer at British Land, Simon Carter, said: "Our strategy of focusing on campuses, retail parks and London urban logistics is delivering. ERV growth accelerated to 5.9%, exceeding our guidance in all sectors. We outperformed the MSCI benchmark by 300 basis points and values were stable in the second half. Our operational momentum continues with high occupancy, strong leasing and good cost discipline driving Underlying Profit growth of 2%.

"We have achieved much this year - the surrender and joint venture of 1 Triton Square, the commitment to 2 Finsbury Avenue following the record breaking pre-let to Citadel, and the sale of Meadowhall are all good examples of our active approach to capital recycling. As a result, 93% of our portfolio is now in our chosen markets.

"Although the geopolitical and economic landscape remains uncertain, with a portfolio net equivalent yield over 6%, 3-5% forecast rental growth and development upside, we expect to generate attractive future returns."

Looking forward, British Land said it expects growth of between 3-5%, and expects its earnings per share to reach 27.9 pence in the 2025 financial year.

Equity analyst at interactive investor, Keith Bowman, added: "The tough economic backdrop including uncertainty over the timing of expected interest rate cuts cannot be ignored and the company’s property values are still falling. A ratio of group net debt to adjusted profit of 6.8 times warrants consideration, while a relatively recent move into urban logistical developments leaves it competing with more established players.

"On the upside, the share price still trades at a discount to net asset value of 562 pence per share. Occupancy levels across its portfolio remain robust at 97%, it’s growing exposure to innovation and life science occupiers at its campuses, while 93% of its portfolio is now within its favoured area of retail parks, campuses, and London urban logistics.

"On balance, and while stubbornly high interest rates and reduced need for physical office and retail spaces are reason for caution, a discounted valuation and forecast dividend yield of over 5% leave analyst opinion pointing towards a cautious buy."

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