17 May 2024
If you are covering Land Securities full year 2024 results, please find comments below from Oli Creasey, property analyst at Quilter Cheviot:
“Landsec’s full year announcement this morning looks back on a tricky 2024, albeit one that the company navigated fairly well. The NAV fell 8% in the year to March 2024, roughly evenly split between H1 and H2, as yields in most of Landsec’s chosen property sectors continued to slide outwards over the course of the year. There were outliers – the yield on Landsec’s outlet malls came in 40bps in H2, but that was an exception rather than the rule.
“The company has seen EPS (adjusted to exclude property revaluation) fall around 6%, even as rents grew 3% like-for-like. This is a result of property sales during the year, but also increasing finance costs, which were up over 20% year-on-year. The company expects 2025 earnings to be slightly lower again following further asset sales post-year end, although we note that earnings should remain comfortably above the 39.6p dividend paid last year.
“Company management have made some relatively optimistic statements this morning, noting that their outlook is more positive, and that “high quality asset values have largely bottomed out”. That is probably more-or-less true, but we worry it is a little too early to call the precise bottom of the market, particularly for Landsec, whose portfolio is around 50% in London offices and mixed-use urban developments – assets whose values fell most in 2024 (-6.5% / -14% respectively), and where the outlook remains cloudy.
“Management also noted that the refinancing of cheap debt remains a challenge for some property companies. Landsec have been selling assets, partly to position the portfolio to align with CEO Mark Allen’s 2020 vision, but also to keep the LTV under control. The EPRA LTV rose to 36.3% in March 2024, but would likely have been higher still had it not been for the sale of assets during the year.”
