(Reuters) - Real estate firm British Land Co (L:BLND) reported a 2.9 percent drop in net asset value for the first half of the year on Wednesday, as retailers invest less in physical stores amid increased online competition.
Many retail firms are shutting down stores to cut costs and focus on the online space, dealing a blow to real estate firms that get a large chunk of their business from retailers.
The company's EPRA net asset value, a key industry metric that reflects the value of a firm's buildings, was 939 pence per share, down from 967 pence per share in the six-month period ended March 31. It was, however, up 4.2 percent from a year ago.(https://reut.rs/2QI7hns)
"We expect retail to remain challenging in both the occupier and investment markets as the impact of long-term structural change is compounded by short-term headwinds," the company said in a statement.
British Land, which counts Marks and Spencer (L:MKS), Tesco (L:TSCO) and IKEA as tenants, added its office business was doing well but the company remained "alert to potential uncertainties as the Brexit process unfolds."
Demand for new office space in London will continue even with the imminent exit of UK from the European Union, a closely watched industry survey showed on Tuesday.
British Land, one of UK's largest listed property developers, has office properties including upscale addresses such as Regent's Place and Broadgate.
The company's underlying profit fell to 169 million pounds from 198 million pounds a year earlier.
Rival Land Securities Group Plc (L:LAND) on Tuesday reported lower net asset value per share in the first-half, also hit by challenges in the retail sector.
Up to Tuesday's close of 620 pence, shares of the company have fallen 10.3 percent this year.