Bottom Line: Happy landing

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The Independent Online
THOSE who scoffedas British Land poured pounds 1bn into the property market during the lean years of 1990-92 must eat their words after yesterday's news of a 43 per cent rise in net asset value.

More than half the portfolio is less than five years old. And they are the bits showing some of the healthiest increases. Superstores, dominated by the Sainsbury sale and leaseback, rose 32.5 per cent and Allders department stores and retail warehouses increased almost as much.

The purchases also mean that shareholders should get a better dividend deal than from other property companies. Rents rose 5.8 per cent last year and, with 37 per cent of its properties - including the Sainsbury sites - subject to guaranteed minimum uplifts, there is more to come.

British Land calculates that these uplifts mean an eventual yield of 9 per cent on the portfolio compared with the present 7.05 per cent.

But good valueis getting harder to find. Long-term interest rates were about 7 per cent when the group bought its 29 per cent stake in Stanhope, co-owner of the Broadgate development, in February. Now they are closer to 10 per cent.

That widens the gap between the pounds 90m rental income of the Broadgate and Ludgate schemes and the cost of servicing the pounds 1bn or more it would cost to buy.

Even the more cautious analysts are expecting net assets of 465p a share this year, leaving the shares on a discount of 16 per cent even after yesterday's 5p rise to 389p.

Rental growth should be sufficient to allow a further 7.5 per cent dividend increase for a yield of 2.6 per cent.

Take a leaf out of Mr Ritblat's book and buy.