15 November 2024
If you are covering Land Securities Group’s half year report, please find comments below from Oli Creasey, property analyst at Quilter Cheviot:
“Landsec’s half-year results are strong, particularly when considered against recent history and expectations.
“The REIT’s diversified property portfolio saw values rise 1% in the six-month period, but with core sectors outperforming expectations, and offsetting weakness, mostly in the mixed use redevelopment portfolio.
“Notably, the City office portfolio bucked recent trends by growing in value by almost 2%. Shopping centre values grew by over 4%, with both sectors comfortably outperforming benchmark indices. The increase in property values has driven a 1.4% increase in NAV, slightly ahead of consensus expectations.
“The company’s earnings in the period are down against the same period last year, but this largely reflects a one-off surrender premium which was paid to the company last year, as well as £690m of disposals which saw the rent roll shrink as a result.
“Like-for-like rental income grew by 3.4%, and the company EPS was at the top end of expectations. Landsec has also increased guidance for full year earnings, now in-line with last year, despite the one-off payment last year and disposals made in the period, with further upside into full year 2026.
“Management anticipates further upside to the current guidance as they intend to make additional acquisitions in the second half of 2025, which will increase rental income. The company has recently purchased the remaining 25% stake in Manchester’s MediaCity from Peel and has stated ambitions to spend more capital in major retail in the second half of the year.
“Today’s results represent a positive surprise for shareholders, and the property market generally, demonstrating that core property sectors are likely past the low point in valuations and have now returned to positive, albeit modest, valuation growth. Management is mindful of the potential impact the recent October budget could have on the company’s tenants, but are supportive of the Government’s growth ambitions, particularly the drive for residential building, which supports the company’s mixed-use urban redevelopment pipeline.”
