Landsec reports record office rental in London as it returns to profit | land values

Land Securities has reported record office rentals in London as the lifting of Covid restrictions fuels a return of workers and a rise in demand for prime space as the property company rebounded from profits. last year.

Landsec is one of Britain’s largest real estate firms and around 60% of its portfolio is in central London. It reported a pre-tax profit of £875m in the year to the end of March.

The company, which owns offices including Deutsche Bank’s London headquarters and an office complex near St Paul’s Cathedral, reported a £1.4bn loss last year as the coronavirus pandemic closed offices across the UK. United.

“Reports of white-collar work disappearing may have been premature, judging by Land Securities’ earnings return,” said Russ Mould, chief investment officer at AJ Bell. “Surprisingly, in central London, the business is experiencing record leasing levels. In a competitive job market where employers likely want their staff to be in the office at least some of the time, attractive locations with flexible space are a must.”

Landsec said it intends to cash in on the post-pandemic office space boom by investing £3bn in “sustainable London office and mixed-use development” over the next five years.

The company said it hit a record £63m in office rents last year, on average 4% above valuers’ assumptions. Landsec said office occupancy in its portfolio reached 95.3%, “demonstrating strong demand for high-quality space.”

Landsec’s shopping center portfolio, which includes Bluewater in Kent and Trinity Leeds, also saw a return to growth in the second half of its financial year.

Comparable retail sales were 1.1% higher than in fiscal 2019/20 and occupancy increased 1.7 percentage points to 93.2% as retailers hoped to take advantage of shoppers returning to malls . Landsec, which paid £126m for an additional 18.75% stake in Bluewater and £426m for a 75% stake in MediaCityUK in Greater Manchester during the year, said it had signed, or is processing, 29 millions of pounds sterling from commercial space leases.

“There has also been a recovery in Landsec retail locations as restrictions ease, and the owner strives to make these destinations attractive to shoppers,” Mould said. “Occupancy rates also increased, although this recovery could be truncated as households cut spending amid cost-of-living pressures.”

The value of Landsec’s office and retail portfolio increased by 11% year-on-year, from £10.8bn to £12bn.

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“Landsec has delivered strong operating and financial results despite the turmoil in the UK economy,” said LandSec CEO Mark Allan. “The actions we have taken, driven by our strategic focus in three distinct areas, have resulted in record rentals in our London office portfolio, a return to growth in our main retail destinations and clear and substantial progress in growth. from our portfolio of urban mixed-use neighborhoods. .”

Landsec expects to sell 21 Moorfields, Deutsche Bank’s new City of London offices, for around £1bn and Allan said the sale is one of “three or four” London office sales he is considering.

“We continue to recycle capital from mature assets, while our portfolio now offers the opportunity to invest £3bn in sustainable London office and mixed-use development over the next five years at attractive returns,” he said.

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