Landsec talks of positive momentum while backdrop remains tough

Landsec, the property giant that owns Bluewater and Liverpool One among other key destinations, has delivered its half-year results and said it’s seeing “clear positive momentum” despite the tough backdrop.

It also raised its guidance for the year to the end of March as it moves further away from office developments and towards retail and homes.

EPRA EPS (a key measure of earnings for real estate companies) was up 3.2% to 25.8p, driven by strong 5.2% growth in like-for-like income as it saw a 10% rental uplift on relettings/renewals. And there was a further 6% reduction in overhead costs.

But IFRS profit before tax was only £98 million, “as substantial capital recycling of £644 million of assets generating no or limited returns result[ed] in a £67 million loss on sale”.

The company said it’s on track to deliver growth in net rental income of between 4% and 5% for the year, which is better than earlier guidance of between 3% and 4%. And annual EPS should be at the “top end” of previous targets.

Looking more closely at retail, as well as the 10% rent rise on relettings and renewals, it delivered a 5% rise in overall like-for-like net rental growth, with EPRA occupancy stable at 96.7% (up 50bps year on year). Some £33 million of lettings are signed or in solicitors’ hands.

It also drove 7.7% retail sales growth, “highlighting the attraction of our top destinations for brands”.

And its retail portfolio valuation is up 2.3%, reflecting strong leasing and continued growth in income.

CEO Mark Allan said: “We continue to see clear positive momentum across every part of our business, notwithstanding the wider economic environment. Owning the right real estate has never been more important, so we continue to benefit from our proactive portfolio repositioning over the last few years, and our entire business is also benefitting from a sharper focus on sustainable EPS growth as our primary performance objective, providing greater clarity in terms of priorities and decision-making.

“This gives us the confidence to raise both our near-term EPS guidance and medium-term EPS growth potential. With a best-in-class portfolio, effective capital allocation, and a clarity of purpose, priorities and objectives, our business is well positioned to build on our strong performance momentum.”