Landsec Sees Strong Momentum and Raises Guidance Amid Strategic Shift
Property giant Landsec, a key player in the UK real estate market known for destinations like Bluewater and Liverpool One, has announced its half-year results, reporting significant "clear positive momentum" despite a challenging economic environment. The company has also raised its full-year guidance as it continues to strategically pivot its focus away from office developments and increasingly towards retail and residential properties.
For the half-year period, Landsec saw its EPRA EPS, a crucial metric for real estate companies, climb by 3.2% to 25.8p. This growth was largely propelled by a robust 5.2% increase in like-for-like income, alongside an impressive 10% rental uplift achieved on relettings and renewals. Further contributing to its operational efficiency, the company reported a 6% reduction in overhead costs. However, IFRS profit before tax stood at £98 million, a figure impacted by a substantial capital recycling initiative involving £644 million of assets generating no or limited returns, which resulted in a £67 million loss on sale.
Looking ahead, Landsec has expressed confidence in its trajectory, upgrading its guidance for the year ending March. The company now anticipates delivering net rental income growth of between 4% and 5%, a significant improvement from its earlier forecast of 3% to 4%. Furthermore, annual EPS is expected to reach the "top end" of its previously set targets, underscoring a period of strong performance and strategic alignment.
The retail segment, in particular, demonstrated exceptional strength. Beyond the 10% rent increase on relettings and renewals, the portfolio recorded a 5% rise in overall like-for-like net rental growth. EPRA occupancy remained stable and high at 96.7%, marking a 50 basis points increase year-on-year. New lettings worth £33 million are either signed or in the hands of solicitors, indicating continued demand. Retail sales growth surged by 7.7%, a clear testament to the allure and strength of Landsec's premier destinations for leading brands. Reflecting this positive operational performance, the retail portfolio valuation increased by 2.3%, driven by vigorous leasing activity and sustained income growth.
Mark Allan, CEO of Landsec, commented on the results, stating, "We continue to see clear positive momentum across every part of our business, notwithstanding the wider economic environment." He attributed this success to the company's "proactive portfolio repositioning" over recent years and a sharpened focus on sustainable EPS growth as its primary performance objective. Allan added that this strategic clarity instills confidence, leading to raised near-term EPS guidance and an improved outlook for medium-term EPS growth potential. With a "best-in-class portfolio, effective capital allocation, and a clarity of purpose, priorities and objectives," Landsec is well-positioned to build upon its strong performance momentum.
