LONDON -- I believe that shares in real estate investment trust (REIT) British Land Company (BLND 0.61%) are primed to shoot higher, with rolling earnings growth in coming years to underpin a steady recovery in its previously pressured dividend policy.

Exciting acquisition activity ready for lift off
British Land controls around 10 billion pounds worth of property in the U.K. Almost two-thirds of the firm's assets are located in the retail sector, the majority of which are in the form of out-of-town retail areas, with the remainder of its portfolio in the office space area.

The firm reported in January's encouraging interims that new retail lettings came in at 13% above estimated rental values, with an excellent occupancy rate of 98.1%. The company's assets remain susceptible to weakness in the wider macro environment, but I believe British Land's stellar asset management should continue to keep lettings rolling.

The firm also sold its Ropemaker Place development in the City of London for 472 million pounds last month, and raised 500 million pounds through an equity placing, to realize a stream of opportunities entering the market. The company started its spending spree last week by buying Tesco's 50% holding in Surrey Quays shopping center in Docklands for 48 million pounds.

City analysts expect earnings per share to edge 2% higher in the year ending March 2013, to 30 pence, results for which are due on Tuesday, 14 May. A further 2% increase is predicted for 2014, to 31 pence, before picking up the pace and rising 7% in 2015 to 33 pence.

The firm currently trades on a P/E rating of 18.8 and 17.6 for 2014 and 2015 respectively, providing a weighty discount to a forward earnings multiple of 24.1 for the wider REITs sector.

A great way to realise juicy dividends
Like all REITs, British Land offers investors an excellent opportunity to generate lucrative dividend income. The firm was forced to slash its payout heavily in 2010, to 26p from 34.6p, and followed a mild downgrade in the previous 12-month period due to the implications of the Lehman Brothers crash in 2008.

However, the company's recent return to earnings growth helped lift the dividend to 26.1 pence last year from 26 pence in 2011, and positive momentum is expected to produce increased payouts moving forwards. Broker estimates put the payout for 2013 at 26.5 pence, and which is anticipated to rise to 26.9 pence in 2014 and 28 pence in 2015. These payouts are expected to carry yields well above the 3.3% FTSE 100 average -- a reading of 4.9% for 2013 is expected to rise to 5% and 5.2% in 2014 and 2015 correspondingly.

British Land only offers miserly dividend coverage of 1.1 times for the next two years, however, well below the safety benchmark of 2 times and theoretically leaving investors susceptible to further heavy dividend downgrades. However, I believe revenues should continue to head higher and support future shareholder payouts.

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