New Value Analysis of British Land Plc (BLND:LSE)

Published by Studio 61 Wealth Management at 25th April 2016

New Value Analysis of British Land Plc (BLND:LSE)

A new value analysis of British Land Plc (BLND:LSE), a company listed in London has been added to our research pages here. BLND is a property investment and management company and is incorporated as a REIT.

A REIT (Real Estate Investment Trust) in UK pays no corporation tax as long as the company pays out 90% of property income as a dividend to shareholders. This makes the REIT form an excellent way for investors to access property income streams with tax advantages. The REIT structure also means that management are incentivised to pay out 90% of income to shareholders.

I first did a value analysis on BLND in March 2015. You can see that analysis here. The 2015 analysis showed BLND passed all the defensive value investor tests. The one questionable area was the current ratio and the yield was only 3%.

The new analysis shows BLND has an improved current ratio and a dividend yield just over 4%. This means that BLND is now better value than it was in March 2015. The price has come down since 2015 and other metrics have improved.

Value investors need to be aware that part of the reported earnings for BLND comes from the revaluation of the property portfolio. In the 2015 Annual Report the revaluation of the property portfolio has a significant impact on reported earnings. Reported earnings are much higher due to the revaluation of the property portfolio.

Underlying earnings run much lower than reported earnings as the revaluation of the property portfolio is not included in underlying earnings. Every investor needs to make up their own mind how much weight they give to reported versus underlying earnings. To get my view click here to download the new analysis.

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