Property developer British Land's third quarter occupancy rates dip slightly

(Reuters) - Property developer British Land Co Plc reported only a slight decline in occupancy rate in the third quarter, adding to signs that property demand from companies continues to hold up ahead of Britain's exit from the European Union.

Britain's second-largest publicly listed property developer reported an occupancy rate of 97 percent with a weighted average lease length of 8 years in the three months ended Dec. 31. The occupancy rate was 98 percent with a lease length of 9 years during the first half.

While the business was "well placed", British Land remains mindful of potential headwinds going forward, Chief Executive Chris Grigg said in a statement.

British Land's shares, which have lost 19 percent since the day before the Brexit vote results were announced, fell 1.5 percent as of 0833 GMT.

British Land confirms broadly positive trends, said Liberum analysts who rate the stock "sell", but added that they expect a softening outlook for occupational demand in office and retail to continue to weigh on shares.

Britain's 900 billion pound commercial property market was one of the biggest victims of the turmoil that followed the Brexit referendum and at one point commercial property funds worth over 18 billion pounds were suspended.

Investor appetite has since returned, with the widest property index once again showing climbing returns, but the market has still a way to go to match its pre-referendum levels.

The Real Estate Investment Trust (REIT), which owns London's Leadenhall office building and Sheffield's Meadowhall shopping centre, said on Thursday it had leased or renewed agreements on 314,000 square feet of retail lettings and 51,000 square feet of office lettings.

Retail accounts for 49 percent of British Land's portfolio, while office and residential account for the rest.

Rates for the leases were on average 8.7 percent ahead of estimated rental value for retail lettings and renewals were in-line for office lettings.

British commercial property capital values fell 2.4 percent in 2016, property consultant CBRE said earlier this month, adding that by December-end rental and capital values had not recovered to their pre-referendum levels.

Analysts at Jefferies downgraded some of the biggest UK REITs on Thursday including Big Yellow Group and Hammerson PLC, citing risks related to a reversal of foreign capital inflows in the sector.

The brokerage estimates that London net effective Grade A rents would fall 20 percent over 2017 and 2018.

(Reporting by Noor Zainab Hussain and Esha Vaish in Bengaluru; Editing by Amrutha Gayathri)