We’ve already seen the worst of the slump

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“If someone could have told me when I joined three years ago that the shares would have risen from £7 to £9.50, then I would have been very content,” said Stephen Hester, British Land’s chief executive, reviewing an unprecedented 12 months of volatility in the value of the company.

Mr Hester oversaw its conversion into a real estate investment trust in January last year, which marked the start of a year-long decline in its share price following a period of unprecedented capital growth in the market.

What was seen as an inevitable correction in the value of shares in the property sector coincided with a turn in property values, souring investor sentiment and sending prices into freefall.

By the end of last year, British Land was trading at a discount of more than 50 per cent to its net asset value, indicating the level of losses that investors expected to see in the company’s property portfolio.

But in the first trading statement to cover the period, Mr Hester puts forward a characteristically vigorous argument that the industry has already seen its worst.

Mr Hester subscribes to what could be called the “glass half full” outlook: that the property industry is going through a short, sharp pricing shock, but that longer term drivers of property value growth such as occupier demand are still positive.

“There remain market uncertainties so there is still a range of possible outcomes,” Mr Hester said. “But the tone of the market is markedly better than it was in November and December.

“We have £200m of deals to be done at pricing broadly the same as December suggesting investors are buying at these levels. If our outlook is correct then there may not be any more declines in certain areas.”

Crucial to the medium-term outlook for British Land, he admitted, was the strength of the occupier market. Other chief executives quietly admit that the property industry can do little more than wait and see how bad the economic slowdown will be.

A recession would most certainly mean a major impact on tenants in the City and in the retail market, the two core markets for British Land.

British Land’s income looks more secure than most, based on a portfolio consisting of mostly prime properties with a 98 per cent occupancy rate and an average lease of 14 years.

Mr Hester, a former banker with Credit Suisse and Abbey, has given British Land a stable debt backdrop and the company has a further £2bn available for future expenditure.

Mr Hester said there were no acquisitions in mind, however. “The £2bn is what we’ve got today but at the moment there is nothing in front of me that I would want to write that cheque for.”

Mr Hester believes there will be few real bargains. “If there are distressed sales then we will look. But my view is that the UK market is not as over-extended as some think, so the incidents of distress will be less.”

British Land will continue to sell in the meantime. It pulled the sale of Meadowhall shopping centre last year, citing the credit crunch, but Mr Hester said this could be revived. “We want to manage our assets hard and will always look to sell properties where appropriate. It is entirely possible that we’ll sell Meadowhall at some future date but it doesn’t kill us to hold it right now.”

Mr Hester is committed to the company’s development pipeline, dismissing concerns over future occupational levels. “Will it take us longer to let?” he asks. “There is that possibility but that is why we always spread our developments with at least two years between completions. I’m completely relaxed about the market in the medium term.”

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