Landsec (LAND) is braced for further blows to its rental income in the wake of the government-enforced lockdown and social distancing, warning that third-quarter collections in June could be worse than the shortfall suffered in the prior quarter. After receiving only 63 per cent of rent due at the end of March, the commercial landlord is not hopeful about recouping those arrears, taking a £23m provision that is equivalent to almost three-quarters of the outstanding amount.
The Covid-19 fallout has exacerbated pressure on a structurally challenged retail estate, which suffered a decline in value of more than a fifth last year and caused the group’s pre-tax losses to soar. Even after excluding the second-quarter rent provision, like-for-like rental income from retail assets was down 4 per cent.
There is likely to be further pressure on estimated rental values in the retail sector, said chief financial officer Martin Greenslade. “I think the lease relationship might change, it might have more of a turnover component to it,” he added. Around a quarter of leases are currently linked to a tenant’s turnover.
The group is onsite at four schemes totalling 1m square feet, but has only committed capital expenditure to 21 Moorfields, EC2, which is fully let. It has the option to call a stop to development activity at ground level on the remaining three, which has left the group with £340m of committed unspent funds on sites currently in the development programme.
Analysts at Peel Hunt forecast adjusted net asset value of 1,050p at the March 2021 financial year-end.
| LANDSEC (LAND) | ||||
| ORD PRICE: | 539p | MARKET VALUE: | £4bn | |
| TOUCH: | 534-598p | 12-MONTH HIGH: | 1,020p | LOW: 515p |
| DIVIDEND YIELD: | 4.3% | TRADING PROPERTIES: | £24m | |
| DISCOUNT TO NAV: | 54% | NET DEBT: | 46% | |
| INVESTMENT PROPERTIES: | £12.1bn* | |||
| Year to 31 Mar | Net asset value (p) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 1,482 | 1.34 | 169 | 35 |
| 2017 | 1,458 | 0.11 | 14.3 | 38.55 |
| 2018 | 1,404 | -0.04 | -5.8 | 44.2 |
| 2019 | 1,341 | -0.12 | -16.1 | 45.55 |
| 2020 | 1,182 | -0.84 | -112 | 23.2 |
| % change | -12 | - | - | -49 |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes investments in joint ventures | ||||
