The percentage of collapsed retailers still paying their rent across Land Securities’ portfolio almost halved in the final three months of 2008.
In a trading update this morning, the UK’s largest REIT said that just 15% of its retail tenants that are in administration were still paying rent at 31 December, compared with 29% at 30 September.
The number of retail tenants in administration as a percentage of LandSec’s annual rental income also increased in the final quarter to 4.8%. This was up from 2.9% in the previous three months. Retail void rates rose from 4.3% to 4.7% during the period.
LandSec added that the outlook for lettings at its St Davids 2 shopping centre in
The REIT said that it had made £214m disposals from its portfolio during the period, as well as the sale of its outsourcing business Trillium, for which it received £520m.
Proceeds from sales have been used to pay down debt and strengthen the company’s balance sheet.
Net borrowings, adjusted for the sale of Trillium, were £5.7bn at 31 December. Most of the debt is secured against the company’s investment portfolio.
Using 30 September valuations, LandSec said the sale of Trillium had reduced its loan-to-value ratio from 53% to 49%. The LTV covenant is 65%.
Chief executive Francis Salway said: “’We maintain a cautious outlook in the belief that property will continue to be affected by the weakness of the wider economy.
“We will focus on balance sheet strength and maximising income across our portfolio. We believe that the companies that can maintain their strength and operational flexibility in the downturn will emerge as the stronger ones when the cycle turns.”
