British Land

I took a look at British Land today. It's come down from a peak of about 1600p to 1000p. Doesn't mean it's cheap, so I crunched the numbers.

By the way, I read somewhere that Net Asset Value is more important for a property company than earnings... this seems to be a popular viewpoint, but I don't believe it for a moment. If it doesn't earn money, then I don't want it - if commercial property prices crash (which they seem to be doing / have done) and if we head into a recession (which we may be doing) then the only thing that's going to hold up the share price is value investors piling into a bargain, and that's only going to be based on earnings.

So, I looked at the annual report. They earn about £600m per year in rents. They have debt of about £6bn. They have very high occupancy rates with a very long average lease length. Overall a pretty solid company - I'd be happy to buy shares in them if the market offered me a bargain.

But what are they worth? I based my valuation on ((20 x earnings) - debt). I figure their growth prospects are balanced by possibly suffering in a recession, so I'm not adjusting up or down for either of those. So my valuation is £6bn, which works out to a share price of 1200p. So I think they're undervalued, but not by much, and certainly not enough for me to be interested.