London, United Kingdom – In a significant development for the UK’s financial landscape, property developer British Land is being relegated from the prestigious FTSE 100 index after a 21-year run. The company’s value has been severely impacted by rising interest rates and the disruption caused by last autumn’s mini-budget. Meanwhile, online supermarket and retail technology group Ocado has managed to hold onto its coveted spot in the ranking, despite experiencing a sharp decline in value since the height of the pandemic.
The quarterly reshuffling of the FTSE 100 index was recently announced by the index provider, FTSE Russell. This index comprises the 100 most highly capitalized companies whose shares are traded in London. Rebalancing occurs four times a year, with companies falling below the 110th position on the London market being relegated. The reshuffle will take effect from the start of trading on Monday, 19th June, leading to British Land’s move to the FTSE 250 index.
Ocado, like British Land, had also faced the risk of ejection from the FTSE 100. However, a recent pickup in its share price has enabled the company to retain its position. Nevertheless, Ocado stands as the worst-performing member of the FTSE 100 this year, with a nearly 40% decline since the beginning of 2023. Since reaching their peak in September 2020 during the height of pandemic-induced lockdowns, Ocado’s shares have plunged by a staggering 85%, reflecting the waning demand for home grocery deliveries.
Despite a decline in value this year, Frasers Group, the retail chain founded by Mike Ashley, has managed to hold onto its position in the FTSE 100 index. This achievement showcases the company’s resilience amidst challenging market conditions.
British Land’s relegation can be attributed to multiple factors. The company has been severely affected by soaring interest rates, which have taken a toll on the UK commercial property market. Moreover, the shift towards remote working has also contributed to the challenges faced by British Land. So far this year, the company’s shares have witnessed a 13% decline, marking the end of its more than two-decade-long tenure in the FTSE 100 index. Simon Carter, British Land’s chief executive, expressed his belief that the value of prime London offices has reached its lowest point after experiencing sharp falls in recent months.
The recent higher-than-expected UK inflation reading has further impacted British Land’s value, potentially leading to future interest rate increases. The company holds significant property holdings in the City of London at Broadgate and Paddington, along with the development of a large life sciences building at Canada Water in southeast London.
Susannah Streeter, the head of money and markets at Hargreaves Lansdown, drew an interesting comparison between Ocado’s position and the recent Premier League finale. She likened Ocado to Everton, stating that it “escaped relegation at the last gasp as the FTSE reshuffle deadline loomed.”