Land Securities swings to publish-Brexit vote loss

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The UK’s largest listed property firm, Land Securities, swung to a loss within the six months to September 30 because the vote to depart the EU weighed on the business property market.

The FTSE one hundred group recorded a £95m loss within the first half, down from a £708m pre-tax revenue a yr earlier, primarily due to a 1.eight per cent drop within the worth of its belongings to £14.4bn.

Nevertheless, the worth decline was lower than analysts had anticipated and smaller than these recorded throughout the broader market, after Land Securities bought off greater than £1bn of properties to chop danger within the run-as much as the referendum.

Shares in Land Securities rose four.four per cent to £10.27 on Tuesday morning.

The group, which is the primary main property firm to report outcomes because the June 23 referendum, introduced 9.eight per cent improve in its first-half dividend to 17.9p. 

Rob Noel, chief government, stated: “The outlook within the brief time period is one in every of uncertainty — we have now a authorities that’s set to set off Article 50 [to leave the EU] within the subsequent ninety working days and enterprise doesn’t actually know what its buying and selling surroundings goes to be.

“We’re seeing decrease ranges of workplace take-up than regular in London and we anticipate that to translate into weaker internet efficient rental values.” 

Nevertheless, he added: “We stay fairly chipper regardless of the market circumstances. The enterprise couldn’t actually be in a greater place.”

Land Securities is intently watched within the property business for its positioning in relation to market cycles, and had warned forward of the vote of a possible “demand shock” in London workplaces if the UK voted to go away the EU.

Mr Noel stated he anticipated retail property to endure as nicely. 

“You’ve seen indicators of it with ‘Marmitegate’. We import nearly 60 per cent of what we purchase and the retailers are going to need to cross these will increase on to the buyer … It will proceed to widen the hole in efficiency between dominant [retail] locations like ours and the remaining,” he stated.

Capital values throughout the workplace and retail property markets have fallen about 5 per cent because the Brexit vote, in line with analysts at Peel Hunt. Property corporations have seen steep drops of their share costs: Land Securities is buying and selling about thirteen per cent under its pre-referendum share worth, whereas its largest rival British Land is 20 per cent down.

Land Securities stated on Tuesday that its income revenue, an adjusted measure, was up four.5 per cent to £192.5m, whereas its mortgage-to-worth ratio rose barely from 22 per cent to 22.6 per cent. 

Mr Noel stated the group was “absolutely locked and loaded” to start buying land for the subsequent cycle, with £1.5bn of money and obtainable borrowing amenities, however added: “I do not assume we shall be spending in scale over the subsequent six months.” 

The group’s speculative improvement ranges are at document lows, whereas it has let forty one per cent of its Nova improvement in Victoria, one of many final of its new tasks to conclude. 

David Brockton, analyst at Liberum, stated the outcomes “exhibit a resilient efficiency right into a market correction”. British Land stories first-half outcomes on Wednesday.


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