A confident Land Securities has boosted its London development pipeline to £1.5bn by adding two speculative schemes.
Chief executive Rob Noel said that constrained supply and increased occupier demand support the decision to start work at 1 New Street Square, EC4, and 20 Eastbourne Terrace, W2.
He said: “We are in a pretty confident mood here. It’s a big bet but the timing looks good.”
The UK’s largest REIT will spend £177m building the 270,900 sq ft Midtown scheme – the final phase of the company’s New Street campus – and £66m on the 92,800 sq ft Paddington office.
Practical completions are scheduled for June 2016 and December 2015 respectively, so do not extend the length of the REIT’s 2.5m sq ft committed London development programme concluding in July 2016.
Noel added that Land Securities would continue to run its net debt-neutral strategy, recycling assets from its £11.8bn portfolio to fund around £300m of capital expenditure per annum.
He said: “We have ably demonstrated that no asset in our portfolio is sacrosanct with the sale of Park House. It depends on the offer and what else we want to spend the money on.”
During the quarter it sold Bankside 1, 2 and 3, SE1, to M&G Real Estate for £315m from its £6.2bn London portfolio, and £116m of assets from its £5.6bn retail portfolio including its interest in the Bon Accord and St Nicholas Centre in Aberdeen.
The group’s loan-to-value ratio at 31 December 2013, based on 30 September 2013 asset values, was down from 37% to 34.6%.
The commitments in the third quarter trading update to the end of December come after the announcement of a speculative start on its New Ludgate, EC4, scheme in the autumn.
Its current London development pipeline also includes The Zig Zag and Kings Gate scheme and Nova, all SW1, and its Walkie Talkie skyscraper at 20 Fenchurch Street, EC3, which is now 87% prelet or in solicitors’ hands, ahead of a handover of prelet floors in April.
Bridget.O’Connell@estatesgazette.com
