British Land has launched a £300m share buyback despite warnings that it risks repeating a similar lacklustre programme from 2007, which failed to improve its share price.

In a sign that the cost of UK commercial property is dramatically diverging from firms’ share prices, British Land’s chief executive Chris Grigg said buying its own shares was better value than investing in physical assets.

The company will buy back the shares during its current financial year, which ends in March 2018, using proceeds from the sale of its 50pc stake in London’s Cheesegrater skyscraper earlier this year.

In doing so, it becomes the first real estate investment trust (REIT) to buy back shares in almost a decade.

Chris Grigg, British Land’s chief executive, said although the company was continuing to sell properties, the buying market was not as easy: “We continue to see strong demand in the investment market, which makes opportunities to acquire new standing assets, at attractive returns, more limited than usual,” he said.

At the same time, the company’s shares have lost around 22pc of their value in the last two years. Mr Grigg said that as the company’s stock was trading at a substantial discount to its net asset value (NAV), the buyback “represents a clear value opportunity”. NAV was 915p when British Land last reported its financial figures in May, while its shares were worth 617p when the market opened on Tuesday.

The company also said it had sold £135m of assets and received offers on £88m since May.

But analysts suggested that British Land risked repeating a share buyback in 2007 under its then-chief executive, former Royal Bank of Scotland chief Stephen Hester, when its stock was trading at around £14.

Robert Duncan, analyst at Numis Securities, pointed out that the 2007 buyback programme had failed to achieve a lasting effect on the share price. “Being purist, we would rather see capital invested in extracting value from real estate than in financial engineering,” he added.

British Land’s shares rose as much as 3.56pc to 625.5p on Tuesday morning.

British Land

Mike Prew, analyst at Jefferies, said British Land should instead be focusing on lowering its loan-to-value ratio, which is currently around 35pc, as the property market is likely to fall in the coming months.

“Chris Grigg's gamble of running more leverage risk anticipating an extended real estate cycle is faltering as global bond yields rise,” he said.

Mr Grigg said on Tuesday that he did not expect the firm’s loan-to-value to change.

Bart Gysens, analyst at Morgan Stanley, suggested that the move reflected a “more bearish view on the prospects of [property] assets, in particular with regards to London offices post-Brexit and with regards to UK retail”. British Land is particularly exposed to these areas, which have been hit by concerns over Brexit negotiations and waning consumer confidence respectively.