MORNING NEWS: Landsec to shift from sell to buy

Good morning. Here’s your daily round-up of the latest news and views from EG and a collection of real estate-relevant headlines from the national papers. There was a sense of déjà vu in Landsec’s results this morning as the REIT said it would shift from a net seller to a net buyer in the second half of its financial year. The firm, which reported a swing back into the black with profit of £243m, said it had transacted on £690m of deals during the six months ended 30 September, but that only £164m of that had been on acquisitions. Reporting its full-year results in May, chief executive Mark Allan said the REIT would be swinging back into acquisition mode after largely completing its £4bn disposals plan. “Our focus for the rest of the year is now on acquisitions,” he said, earmarking some £600m to spend on major retail acquisitions. So far those deals have included a £120m splash buying an extra 17.5% in the Bluewater shopping centre in Kent, in which it is already the majority stakeholder, and £15m buying a block opposite its Buchanan Galleries mall in Glasgow. Allan said: “In terms of capital allocation, we still see the most attractive risk-adjusted returns in major retail, where income returns are in the high single digits and rents are growing. Capital values are roughly half of their replacement cost, so new supply is non-existent.” He added: “All this offers the potential for double-digit ungeared IRRs and following the acquisition of an additional £120m stake in Bluewater in June, we are confident in deploying further capital at accretive returns in the second half.” GPE boss Toby Courtauld is also in acquisition mode. He told EG the firm is eyeing almost £2bn of potential deals as the investor-developer continues to take advantage of what its top team sees as a turning point for London’s office market. Since the company announced in May that it was back in the market for buying, it has acquired the Courtyard at 1/3 Alfred Place, WC1, for £28.6m from the City of London Corporation; 19-23 Wells Street, W1, for £19m from British Land; and Whittington House, WC1, for £58.5m from an exiting owner-occupier. “The conditions we identified in the summer that we were interested by have turned out to be the reality,” said Courtauld. “We have been able to buy at 60% discounts to replacement costs. And I think we’ll do more of that. We may not be able to operate at the same rate that we have in the last four months for the next period in the year. But we’ll certainly be buying and I’m pretty sure we’ll be buying at discounts for replacement costs as well.” The company now has eight assets on its A-list; targets for which it has good details and has already made assumptions around capital expenditure needs. Those have a combined quoted price of £187m and assumed capex of £467m. GPE reckons it will complete on some £247m of those £654m of opportunities. Elsewhere, AlixPartners is closing in on a new HQ as EG reveals that it is under offer for around 87,500 sq ft at Beltane and TPG’s One Millennium Bridge, Socius and Aviva have revised their plans for the £1.2bn London Cancer Hub and Regal has submitted plans for a 187-bed student accommodation scheme in Camden, NW1. And if you’re looking for a little longer read to relax into the weekend with, why not sit back with this week’s EG Interview as we find out what’s been driving Watling Real Estate since its spin out of Avison Young. All of the news from EG, plus a selection of headlines from the nationals: Landsec remains committed to retail despite lack of dealsEG Interview: Watling Real Estate on life after AYFind, buy, repeat: GPE’s £2bn acquisition listAlixPartners nears deal at One Millennium BridgeValuation fall pushes Soho Estates deeper into the redCOMMENT: What the Dutch can teach us about topping up retrofit projectsNew strategy and political landscape give Assura healthy resultsHillcrest to transform Manchester’s Arkwright HouseDeveloper duo dive into Leeds BTR scheme on swimming pool siteSocius and Aviva revise £1.2bn London Cancer Hub proposalsHardman’s Aboria Capital makes three key hiresKadans opens up first phase of Tileyard Quarter in King’s CrossRegal and 4C submit plans for Camden PBSA schemeCity of London Culture Mile reveals public realm strategySocial value firm appoints FolkesHunt on for Huddersfield foodiesWHSmith aims to have 500 shops in North America by 2028 (£)China’s retail sales jump but property gloom persists (£)