- Land Securities owns the Piccadilly Lights and Bluewater shopping centers
- The FTSE 250 company’s net assets fell by £625m to around £6.4bn
Land Securities nearly halved its losses last year even as interest rates continued to depress real estate values.
The commercial property developer, which owns the Piccadilly Lights and Bluewater shopping centre, revealed pre-tax losses fell 45.2 per cent to £341 million in the 12 months to the end of March.
Its net assets fell by a further £625m, to around £6.4bn, after falling by more than £900m the previous year, following further base rate rises by the Bank of England.
Better results: Land Securities, owner of the Bluewater shopping centre, revealed pre-tax losses fell 45.2 per cent to £341 million in the 12 months to March.
Landsec’s central London portfolio sank 6.9 per cent in value, with its offices seeing a 13.9 per cent drop.
Higher rates have caused significant pressure on valuation returns and much lower transaction activity in international commercial real estate markets.
Valuations have been further depressed as companies reduced their office footprints since the Covid-induced rise in hybrid working, especially in London and other major cities.
Adam Vettese, an analyst at eToro, said: “The company has had to combat these challenges by optimizing its portfolio and divesting unproductive assets.”
Last week, Landsec announced the sale of its hospitality business for £400m to investment firms Ares Management and EQ Group in order to “focus its resources on areas where it has a genuine competitive advantage”.
This follows the company recently selling two small retail outlets, a couple of leisure assets, a retail park and the West 12 shopping center in Shepherd’s Bush, London.
However, Landsec said yields and asset values are beginning to stabilize amid hopes of future interest rate cuts and improving demand.
It noted that around 60 per cent of its portfolio remained “effectively stable” in the second half of the period, while overall returns were stable during the final quarter.
Vettese added: “The company will be hoping that this week’s softer-than-expected inflation number in the US brings us a step closer to the start of rate cuts, which cannot come soon enough as there is still some time left. the refinancing of the cheapest debt acquired before 2022”. an obstacle to overcome.’
Mark Allan, chief executive of Landsec, said rate stabilization and rental growth are “starting to attract greater investor interest in prime assets”.
He added that the company’s sale of more than £600 million in assets in the last seven months had given it “significant ability to invest in high-quality assets that add to our world-class portfolio in terms of we think it’s an attractive point in the cycle.’
Oli Creasey, property analyst at Quilter Cheviot, warned that while “management has made some relatively optimistic statements”, there are concerns that “it is too early to determine the exact bottom of the market, especially for Landsec”.
He added: ‘(Landsec’s) portfolio is made up of around 50 per cent London office and mixed-use urban developments, assets whose values fell the most in 2024 (-6.5 per cent / -14 per cent respectively), and where the outlook remains cloudy. ‘
Land Securities Group Shares They fell 2.6 per cent to £6.72 in early Friday afternoon, making them one of the five biggest losers on the FTSE 100 index.