As Landsec plans a pivot away from offices and retail parks, specific assets marked for disposal are beginning to come to market.
The company last month said it will free up capital from low- or non-yielding pre-development assets during the next three years, recycling the money into higher-income and higher-growth opportunities.
Ultimately it is working towards establishing a £2bn+ residential platform, which it claims will enable it to capitalise on “the opportunity to build meaningful exposure to a structural growth market”.
In line with those plans, Landsec has begun identifying assets it will look to dispose of. The largest is Hill House in the Square Mile, where the company received planning approval for a 380,000 sq ft 18-storey office tower last year. The proposed development, valued at around £250m, would replace the nine-storey brutalist block on the site.
The REIT also owns 55 and 65 Old Broad Street, also in the City, which it bought for £87m in 2020. It has planning approval for a £450m Fletcher Priest-designed 23-storey office and retail block on the site, but it is unclear whether the scheme will be included in the pre-development assets the company is looking to exit from.
Order of offloads
If Old Broad Street is included, the REIT would be exiting sites with approval to deliver over 660,000 sq ft of space in the Square Mile, as well as a number of sites in London’s Southbank submarket.
The first is Red Lion Court, which Landsec has brought to market for around £46m. The company secured approval in 2023 to build a £320m, 11-storey block with 230,000 sq ft of offices, retail and public space on a site adjacent to Borough Yards.
After that the company is set to bring adjoining buildings at 22-24 Southwark Bridge Road to market after receiving approval for their redevelopment last month. This would see the demolition of 24 Southwark Bridge Road and the partial demolition of the adjacent building to provide a six- to 12-storey office-led development with almost 200,000 sq ft of office space.
The Liberty of Southwark development also promises to attract interest. Landsec acquired the land at 15 Southwark Street for £54.7m at the end of 2021 and had originally received planning approval for a 160,000 sq ft mixed-use office, retail and residential scheme on the site.
However, after the most intact Roman mausoleum ever discovered in Britain was unearthed on the site, as well as several Roman mosaics, the company submitted updated plans in 2023. These sought to accommodate the surprise discovery, which its planning consultants say added “delays to the progression of works on site, and therefore, present a financial challenge.”
Though the company received approval for the plans at the end of last year, the site has been identified as one of the schemes it is looking to exit.
New focus
Landsec remains committed to its other schemes in the Southbank market, such as the 139,000 sq ft office development at Forge and 365,000 sq ft Timber Square project at 25 Lavington Street, expected to be delivered in Q4 of this year.
A company spokesperson declined to comment on the specific assets to be sold, but says: “Last month, we set out a new strategic focus of the business which will guide our approach for the next five years. This will involve releasing capital from some of our non-yielding pre-development assets – including office development sites and strategic land sites – as well as continuing to recycle capital out of our subscale retail portfolio.
“To facilitate the rollout of our strategy, we’ll be reviewing our portfolio – that review remains ongoing, so it would be inappropriate to speculate at this stage.”
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