Retail may have dragged down full-year results for Landsec, contributing to a 4.1% decline in valuation to £13.8bn and 4.5% decline in net assets per share to 1,341p, but the REIT has no plans to sell down any more of its retail portfolio.
Chief financial officer Martin Greenslade said Landsec had already sold two-thirds of its retail park portfolio and reduced its shopping centres outside London from 19 to six and that it was too late to sell once the market had already turned.
Instead the REIT will be investing in centres to make sure it has a diversified tenant base and income stream.
“It would not be the right time to have the ambition to sell retail assets,” said Greenslade, before adding that the REIT was, of course, always open to offers.
Retail, leisure and hotels makes up around 35% of Landsec’s portfolio. As a whole, the retail portfolio recorded a 8.4% decline in valuation during the 12 months ended 31 March, with shopping centres down by 11.7% and retail parks down by 15.5%.
Rental income across the retail portfolio declined by £10m.
Revenue: £757m – down by 8.8% from £830m
Pre-tax loss: £123m – up from a loss of £43m
Net assets per share: 1,341p – down by 4.5% from 1,404p
Group LTV ratio: 27.1% – up from 25.8%
Landsec’s London portfolio, however, performed better, with a £20m uplift in rental income and a return to development.
Greenslade said the REIT expected to kick off development of some 500,000 sq ft of space in London over the next few months.
“The London market has been incredibly resilient,” said Greenslade. “There is demand for high-quality, grade A space.”
Landsec said it was “actively tracking” a high volume of both development and investment opportunities across the capital and was looking to buy in both well-established and emerging locations.
This is an exciting time for real estate companies with the insight and capabilities needed to create the spaces for tomorrow’s businesses and communities
Its most recent acquisitions were a 1.6-acre site in Lavington Street, SE1, and a small mixed-use site on Wardour Street, W1.
The REIT has a 3.6m sq ft near-term development pipeline in London, including 2.2m sq ft of offices and 1.4m sq ft of residential-led mixed-use schemes.
Alongside the development of new office space, Landsec is continuing to launch new office product into the market.
Earlier this year it launched flexible office space provider Myo and has now followed this up with the launch of Landsec Fitted, a slightly longer-term lease offer that rents fully fitted-out space to occupiers, and Landsec Lounge, a communal, break-out space offering for tenants that has been trialled at Cardinal Place, SW1.
Chief executive Rob Noel (pictured) said: “Our business continues to evolve. Some 65% of our assets by value and our entire £3bn pipeline of development opportunities are now in London and over the coming years the business will be more concentrated in the capital.
“Landsec is in a healthy financial position. We have a clear sense of where current and future opportunities lay and are well-placed to address our customers’ changing needs and deliver sustained value creation for our shareholders.
“This is an exciting time for real estate companies with the insight and capabilities needed to create the spaces for tomorrow’s businesses and communities.”