Join our community of smart investors

Land Securities ups development despite retail woes

The commercial property group is looking to London to drive valuations and rental growth
November 12, 2019

A fall in the value of Land Securities' (LAND) retail assets may have caused the commercial property group to swing to a first-half loss, but that has not deterred management from boosting the group's development pipeline. It is working on site at four developments totalling 1m square foot (sq ft) of space, around a third of which was added across two schemes during the period.

IC TIP: Hold at 890p

Chief financial officer Martin Greenslade said he is comfortable with the portfolio’s loan-to-value ratio, which inched up to 28.1 per cent amid higher spending on the Nova East and Lucent London office developments. “That would only take our loan-to-value to under 31 per cent,” said Mr Greenslade – although that is assuming no change in the value of assets. However, the group may make some disposals to fund the capital expenditure of the work over the next two years, he said.  

It is little wonder capital expenditure is focused on offices. While Landsec's like-for-like rental income grew 2.5 per cent for the group’s portfolio, its like-for-like voids were just 0.8 per cent, while its portfolio value rose marginally. By contrast, retail net rental income fell 2 per cent and valuations deteriorated across the London, regional and retail park portfolios. 

Analysts at Panmure Gordon forecast adjusted net asset value (NAV) of 1,301p at the March 2020 year-end, rising to 1,304p in 2021.

LANDSEC (LAND)    
ORD PRICE:889.6pMARKET VALUE:£6.6bn
TOUCH:889.2-889.8p12-MONTH HIGH:983pLOW: 732p
DIVIDEND YIELD:5.2%TRADING PROPERTIES:£23m
DISCOUNT TO NAV:31%NET DEBT:40%
INVESTMENT PROPERTIES:£12.9bn*  
Half-year to 30 SepNet asset value (p)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20181,341425.922.6
20191,298-147-19.623.2
% change-3--+3
Ex-div: 28 Nov   
Payment: 3 Jan   
*Includes investments in joint ventures