British Land has built up a near 2% gain after making a bet on the success of London's new Crossrail system.
The east-west rail line is due to open in 2018 and ahead of that, the property group has bought the bulk of an office, shops and hotel complex in Paddington near the Crossrail station. It has paid £470m to insurance group Aviva to take over the scheme, which it expects to grow in value as the area is redeveloped. Chief executive Chris Grigg said:
It is an investment which...is in line with our strategy of increasing exposure to London and replenishing the development pipeline. This is the most significant acquisition we have made since [a £493m] equity placing in March.
The news has sent British Land's shares 9.5p higher to 594p. Analyst Matt Saperia at Oriel Securities said:
Today's acquisition, and its subsequent earnings enhancement, should now enable management to sharpen their dividend guidance for the coming year which was set at 'not less than' 6.6p per quarter pending investment of the March placing proceeds. We currently assume 6.7p per quarter.
