Land Securities chief executive Rob Noel says the REIT’s retail portfolio is on track to weather the unprecedented change taking place in the sector.
Shrugging off concerns over LandSec’s “weaker” £4.75bn retail portfolio following publication of his maiden set of annual results this week Noel said the company’s strategy of focusing on locations favoured by retailers and customers will deliver returns.
“Our portfolio is structured to meet the changing requirements of retailers best able to compete in these [tough economic and rental] conditions” he said.
He pointed to the company’s 155,000 sq ft Buchanan Street scheme in Glasgow which he said was on track to make a 40% profit, and its 1m sq ft Trinity Leeds which is 72% prelet ahead of a spring 2013 opening.
In its full year results to the end of March, the value of the group’s retail portfolio fell by 0.1% overall, with shopping centres down 3.2% to £2bn, as rents dropped 1.8% on average. Retail warehouses rose 1.1%.
The group’s £5.58bn London portfolio – which comprises 61% of its business – had a stronger year, with central London offices rising 4.3% to £3.5bn.
Its £1.9bn development pipeline, which includes its 690,000 sq ft “Walkie Talkie” tower at 20 Fenchurch Street, rose in value by 8.2%.
Noel said that 8% of the tower was in solicitors hands and up to 200,000 sq ft is in advanced stages of negotiations, but did not confirm insurance groups Markel and Kiln as prospective tenants.
Overall, analysts welcomed a solid set of results revealing a 4.5% rise in adjusted net asset value to 863p, ahead of the stock market expectation of 856p a share.
Revenue profit – the profit from the company’s activities rather than surpluses from upward valuations – increased 9% to £299m.
At the year end, LandSec’s gearing was 38% – the same level as in March 2007 – and the group has an estimated £1.7bn of firepower which can be used to “exploit opportunities within and outside our portfolio”.
