16 May 2025
If you are covering Landsec’s latest financial results, please find below a comment from Oli Creasey, head of property research at Quilter Cheviot:
“After a positive first half, Landsec’s full year results are a little disappointing. While the company’s net asset value grew 1.7% over the year, the vast majority of this occurred in the first half, with only 0.3% increase in the second half, resulting in a 1% miss compared to expectations. UK property benchmark indices have continued to see capital growth, around 2% in six months to March, so it is disappointing that Landsec has not been able to keep pace with that. It appears that specific factors may be to blame, notably a sharp fall in value of one Central London property (soon to be vacated) and goodwill write down, plus devaluation of ongoing and soon to be started development projects.
“Rental growth continues to be strong, though, with rents up 5% like-for-like during the year. However, earnings are largely unchanged, primarily due to property disposals, with nearly £500m sold in the year.
“Also of note is a sharp increase in loan to value, almost all of which occurred in the second half of the year. Landsec’s quoted target LTV is below 40%, so it is a little troubling to see it rise above this figure, especially given that property values have increased (albeit modestly) in the period. On the plus side, disposals post-year end should reduce the number. The company spent around $850m on acquisitions and capex in the last six months, which increased net debt substantially, while there were limited disposals in the period to offset that spending.
“Earnings are in-line, but the NAV miss is slightly troubling. Analysts had expected Landsec to accelerate in H2, but growth has stalled. The hope is that this is a temporary stutter rather than a false start.”
