Land Securities, a British landlord, has stated that it expects low to mid single-digit percentage growth in annual rental values for its London properties, despite ongoing pressure on building valuations. The company attributes this decrease in valuations to high interest rates, which have impacted investment activity in the sector. However, Landsec’s CEO, Mark Allan, remains optimistic, foreseeing an increase in investment activity by 2024, which should support the values of the company’s prime assets.
Land Securities, headquartered in London, has focused on investing more in prime retail spaces due to a positive outlook for that portfolio. The company expects its earnings per share for the year to be stable compared to the previous year. Additionally, Landsec has made significant progress towards its £2.5 billion ($3.07 billion) disposal target set in 2020, having already achieved about 90% of it.
The company has reported a 60 basis point increase in overall occupancy in Central London, which represents about two-thirds of Landsec’s property portfolio. Furthermore, the utilization of office properties has seen a significant jump of 22% over the past 12 months, with footfall on weekdays returning to pre-pandemic levels.
However, Landsec’s half-year pretax loss has deepened slightly by 0.5% to £193 million ($237.3 million). This can be attributed to a 4.6% year-on-year decrease in net tangible assets, which reflects the value of its buildings. As of September 30, the net tangible assets stood at 893 pence per share.
Regarding the impact of WeWork’s bankruptcy, Allan mentioned that although the U.S.-based group had performed well in the London market, concerns about service levels may lead to demand shifting to operators with more capacity in their flexible workspace portfolios. Landsec’s own flexible office space offering, Myo, is currently 97% full.
In conclusion, Land Securities remains cautiously optimistic about the growth of rental values for its London properties, despite ongoing challenges in the sector. The company expects investment activity to pick up in 2024, which is predicted to support the values of its prime assets. Landsec continues to focus on its investment in prime retail spaces and has made significant progress towards its disposal target. While the company has experienced a slight pretax loss and a decrease in net tangible assets, it has seen an increase in overall occupancy and utilization of its office properties.
More detail via ETRealty.com here… ( Image via ETRealty.com )