Land Securities ups guidance as commercial property group recovers to profit

Bluewater Shopping Centre owner Land Securities has raised its full-year outlook after rebounding to a first-half profit.

The commercial property investment trust reported £243million in pre-tax profits for the six months ending 30 September, compared to a £193million loss over the same time last year.

Its like-for-like rental income increased by 3.4 per cent, thanks to occupancy rates surpassing pre-pandemic levels at its major retail outlets and hitting a record of 97.9 per cent across its Central London portfolio.

A 10 per cent drop in overhead costs also meant the group expects its earnings to be in line with the 50.1 pence per share it achieved last year.

LandSec’s property portfolio valuation also expanded by 0.9 per cent, helped by stabilising yields and stronger activity in investment markets.

The FTSE 100 firm told investors: ‘Demand for modern, sustainable office space in London remains strong, and in retail, brands continue to focus on fewer, but bigger and better stores in key locations.’

During the period, it agreed a deal allowing high street giant Primark to nearly double its space at the White Rose Centre in Leeds from 37,000 to 71,000 square feet.

In addition, cosmetics brand Sephora and Inditex-run labels Bershka and Pull&Bear opened outlets in Bluewater, while JD Sports launched a major new shop in Cardiff’s St. David’s shopping centre.

LandSec anticipates its retail portfolio growing in the second half on the way to achieving a low to mid-single-digit percentage gain in rental values this fiscal year.

Mark Allen, its chief executive, said: ‘We have continued to reposition our portfolio towards higher-return opportunities and are confident of deploying further capital towards this in the second half.

‘Having managed our balance sheet well as markets corrected, we are now well placed to deliver growth and attractive returns.’

Britain’s commercial property sector remains depressed by elevated interest rates and the rise of working from home since the Covid-19 pandemic started.

The UK office market recorded just €4.2billion worth of transactions in the first six months of 2024, according to MSCI, its weakest performance since the finance company began measuring the data in 2001.

Russ Mould, investment director at AJ Bell, said the firm’s trading update was ‘striking not just for the earnings upgrade contained within it but also the upbeat tone adopted by the company.’

He added: ‘While there are promising signs, investors may want to see further evidence of improved performance before the wide discount to net asset value – the value of its properties minus any liabilities – narrows meaningfully,’

Land Securities Group shares were 2.8 per cent up at 596p at midday on Friday, although they have fallen by around 16 per cent so far this year.

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