British Land at half price

The severity of this market correction continues to amaze me.

Some of my blue chip bank holdings are down 40% from their highs in February. Not to be outdone, British Land (BLND) is down over 50% from its January high.

This fall has everything to do with fear of the future and nothing to do with the present.

On the 15th November BLND reported their results for the 6 months to 30th September. Net Asset Value (NAV) was the same but income was up 10% and EPS was up 30%. Real estate companies are valued more on their NAV than their PE and BLND is now available for 50% of its NAV. Even the trailing PE of 16 is starting to look reasonable as real estate companies typically have a PE of around 30. The dividend yield is now a very pleasant 4%.

So why has BLND been hit so hard? Part of it is a general market correction, part of it is a specific property market correction and part of it is a fear of any kind of real estate company due to the sub prime mortgage issue in the US.

However the shares look cheap at this level - so cheap that the company has started a buyback program.

I think the shares are a bargain at this level so I will accumulate some more. There is nothing to say that the price will not go down further though. Anything can happen in this market!