British Land reported a forecast-beating gain in first-half net asset value and said its dividend would almost double after it converts into a low-tax investment trust.
Europe's second-largest listed property firm, which last week clinched a #21 million deal to buy and redevelop the NatWest Tower in Birmingham, saw its share price reach a record high after the announcement yesterday.
It said the outlook for its core London office market remained positive, while it expected an improvement in the fragile retail sector.
Underlying pretax profits for the period were up by 27 per cent to #130 million, although headline profits – which include revaluation surpluses – were down eight per cent to #702 million in the six months to September.
Projects including the second phase of Blythe Valley Business Park in Solihull, which will see another 800,000sq ft of office space added, were progressing well, with construction due to begin on site next year.
Chief executive Stephen Hester said: "The flagship at the moment in terms of performance is our London offices. Our development programme, which has got a number of landmark buildings, is providing very good growth.
"Crucial future performance is going to be rental growth and you can see the markets already reorienting themselves towards those companies that are producing good rental growth."
Net asset value, a key performance measure for property firms, rose by 9.3 per cent to 1,624p per share at September 30, compared with 1,486p at the end of March.
This followed a like for like increase in rents which grew by 2.8 per cent, ahead of industry average of 1.8.
The result compared with an average forecast of 1,609p provided by the company.
Meanwhile its portfolio value rose by 6.2 per cent, in line with the market growth measured by Investment Property Databank, to #19.8 billion.
Shares in British Land, which have a market value of #8.5 billion and moved roughly in line with the UK property sector over the past six months, rose 0.9 per cent to 1,618 pence by in early trading, after touching a record high of 1,635p.
Brokers KBC Peel Hunt said: "British Land is powering ahead through sector leading leverage."