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Landsec will be announcing its half year results for the six months to 30 September 2023 on Tuesday 14 November 2023. A presentation will be held at 9:00am GMT and conference call details will be confirmed ahead of the event.
Landsec will host a Capital Markets Event for analysts and investors this afternoon at its London office developments, Lucent at Piccadilly Circus and n2 in Victoria, which completed earlier this summer. This will include an update focused on the operational performance of its Central London business.
Since the end of March, customer demand for Landsec's best-in-class office space in London has remained strong. As a result, over the first five months of the financial year, occupancy in the company's Central London portfolio increased by 100bps to 96.9%, with £17m of lettings signed or in solicitors' hands, on average 3% ahead of ERV.
In Victoria, which makes up nearly half of Landsec's Central London business, the company's existing office portfolio is now 100% let. In addition, its recently completed development at n2 is now 80% let with the remaining 20% in solicitors' hands (up from 66% let and 6% in solicitors' hands in May) whilst Lucent is 62% let with a further 14% or in solicitors' hands (up from 19% and 53% in May). Reflecting the strong demand, rents across both schemes are more than 10% ahead of initial assumptions.
With rents continuing to grow and its entire office estate in Victoria 100% full, Landsec has now committed to the start of Thirty High (formerly Portland House), which is expected to complete in the summer of 2025. The total development cost for this major refurbishment is estimated to be c. £400m, with a gross yield on cost of c. 7.5% and a gross yield on the c. £240m capex investment of over 12%.
Mark Allan, Chief Executive, commented:
"Over the past year, we have been decisive in positioning the business for a higher for longer interest rate environment. Our disposal of £2.2bn of mature, mostly single-let offices, predominantly in the City, before the start of this financial year has proven very timely. As such, we have flexibility to respond to the opportunities that will start to arise from the adjustment to a higher rate reality, as it remains clear that customer demand for the most sustainable, high-quality space in the best locations remains resilient."
idpickering wrote:I the current weakness in the LAND share price, that is down 2.3% as I type, is as a result of the above release, I'm surprised to be honest. I thought the RNS was ok? But what do I know?
Ian.
EthicsGradient wrote:British Land is down too, by a similar amount. In their case, during yesterday there was the announcement that Meta was paying British Land £149m to get out of a central London lease: https://www.standard.co.uk/tech/meta-br ... 09506.html
Though that did break as news during yesterday, not after trading. I heard about it later, and it was discussed as indicating problems for the office rental market. Maybe it took the market a bit of time to make up its mind?
Landsec held a capital markets day this week in which it showcased completed new West End developments.
"The event looked at two recent completed developments - n2 in Victoria and Lucent in Piccadilly. Both demonstrated Landsec's ability to deliver complex projects within existing central London infrastructure and also provide appealing multi-use spaces that can perform for occupiers in a changing work environment," Saunders said.
"We believe investor sentiment should now start to warm to the stocks with office exposure here and, in our mind, Landsec's event yesterday looks particularly well-timed."
Saunders also reckons that the market mood towards real estate investment trusts in general should begin to improve as the UK interest-rate cycle reaches its peak.
"While there remain wider challenges for the office sector at large, Landsec's wider portfolio also looks in broadly good shape. This position is increasingly at odds with the current share price - that implies a 30% fall in the portfolio value in FY24F," Saunders said.
Mark Allan, Chief Executive of Landsec, commented:
"Our high-quality, differentiated portfolio and focused capital allocation mean we continue to benefit from customers concentrating on best-in-class space. In London, our well-located, sustainable offices in vibrant, amenity-rich areas continue to see growing occupancy, growing utilisation, growing customer space requirements and hence growing rents. In retail, sales in our locations continue to outperform brands' overall sales growth, also driving further growth in occupancy and rents. Despite the challenges in the general economic outlook, we see no signs of these trends abating.
"Since early 2022, we have been clear that we expected interest rates to remain higher for longer and that asset values would have to adjust to this new reality, which they have. We were decisive in acting on this view by selling £1.4bn of single-let HQ offices, mostly in the City, at prices ahead of today's values. Investment activity remains thin, but we expect this to pick up in 2024, which should start to support values for the best assets. We will continue to recycle capital where our ability to add further value is limited, but having been a net seller when prices were higher, we are well-placed to take advantage of opportunities that will no doubt arise as the new higher-for-longer reality is now more widely accepted."
And later;
2023/24 second quarterly dividend
The Board has declared a second quarterly dividend for the year ending 31 March 2024 of 9.2p per ordinary share which will be paid on 2 January 2024 to shareholders registered at the close of business on 24 November 2023. This will be paid wholly as a Property Income Distribution (PID). Together with the first quarterly dividend of 9.0p already paid on 6 October 2023 wholly as a PID, the first half dividend will be 18.2p per ordinary share (six months ended 30 September 2022: 17.6p).
Landsec will announce its full year results for the year ended 31 March 2024 on Friday 17 May 2024.
A presentation will be held at 9:00am BST and conference call details will be confirmed ahead of the event.
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