Land Securities signals dividend return

Though the intention to restart shareholder distributions follows a board review, no details have been given on the size and timing of the interim dividend. Pay-outs were cancelled in April as the Covid-19 pandemic forced UK highstreets into lockdown and plunged commercial landlords’ income generation into further doubt.

An update on cash collection in recent weeks will do little to assuage those concerns. Even after accounting for tenant concessions and deferrals, just 60 per cent of the £109m of rent due on 24 June was paid by the end of the month, compared with 94 per cent in the same period in 2019.

Office tenants, which make up more than half of Land Securities’ rental income, paid £55m of the £68m due, while just £10m of the £39m expected from retail and specialist tenants arrived by 30 June.

Money owed for the first quarter of the year continues to lag, too. While 98 per cent of office collections are now accounted for, £30m of rent due on 25 March remains outstanding, of which just £5m related to agreed concessions and deferrals.

This suggests the business is yet to reach terms on repayment plans for many retail customers, though management remains committed to supporting struggling tenants. Conversations are reported to have been “constructive”, echoing comments from chief financial officer Martin Greenslade in May, when he told us that lease relationships might be re-based with greater reference to turnover.

To what degree that turnover can improve in the months ahead remains up in the air. Since restrictions on shopping centres, outlets and retail parks were lifted on 15 June, the landlord said it had seen “encouraging” levels of footfall, and a 22 per cent rise in transaction values compared to the same period last year.

However, this likely points to a release in pent-up demand among some shoppers, given that footfall is in fact down 40 per cent year-on-year, with like-for-like store sales off by a fifth.