Land Securities Group (LON:LAND) said strong rental growth offset the earnings impact of an office disposal in its half-year results, and forecast faster earnings growth as it leases new London developments and expands its shopping center portfolio.
The property company, also known as Landsec, reported stable EPRA earnings per share as like-for-like net rental income rose 6.2%. It maintained its full-year earnings guidance and said it now expects improved high-single-digit percentage EPS growth in fiscal 2028, ahead of its previous outlook.
Chief Financial Officer Vanessa Simms said the company has greater visibility on its goal of approximately 5% compound annual EPS growth to 62 pence by fiscal 2030. About 90% of the projected growth would come from the existing portfolio and platform, up from 80% six months earlier, she said.
“We feel pretty confident in delivering the outlook as it stands today,” Simms said during the analyst question-and-answer session.
Retail acquisitions and capital recycling
Shortly after the half-year period ended, Landsec raised £500 million in equity to help fund the £611 million acquisition of Metrocentre and an additional stake in Bluewater. The Bluewater transaction increased its ownership to 74%. Landsec described both properties as among the U.K.’s top 10 shopping centers by sales.
Simms said the transactions are expected to be neutral to EPS in the current financial year and accretive in their first year of operation. Following the deals, loan-to-value fell to 37.1% and net debt to EBITDA declined to 7.7 times. The company expects the latter measure to fall comfortably below seven times as developments are leased and income grows.
Landsec said it has invested about £700 million in major retail since its strategy update in early 2025, putting it ahead of its three-year target of £1 billion. Over the same period, it sold £1 billion of offices, non-core properties and non-yielding pre-development assets, against a five-year disposal target of about £3 billion.
At Metrocentre, Landsec expects its existing operating platform to add about 40 basis points to the property’s 7.9% income yield in the near term. Management said this initial improvement would not require investment, although it outlined approximately £30 million of potential spending to help repurpose vacant space and drive further rental income.
Rental growth and leasing
Retail like-for-like net rental income rose 6.3%, with occupancy reaching 97.8%, its highest level in more than 20 years. The company signed or had in solicitors’ hands £29 million of new retail leases, averaging 12% above estimated rental value, or ERV.
Office like-for-like income increased 5.4%, ahead of expectations, while office occupancy was 98%. Landsec said its office reversionary potential—the gap between current income and estimated rental levels—rose to 20%, or £50 million. Across retail, uplifts on relettings and renewals reached 17%.
Simms said Landsec now expects full-year like-for-like net rental income growth at the upper end of its existing guidance, primarily because of stronger-than-expected office growth. The company raised its medium-term assumption for overall annual like-for-like income growth to approximately 4% to 5%, from around 4% previously.
Three recently completed London office developments were 88% let or under offer, up from 54% in May. Completion of a fourth project, Thirty High, has been delayed by up to six months because of an issue during testing and commissioning that Landsec said has since been resolved. The company does not expect a material impact on total development cost or full-year earnings guidance.
Development and financing
Landsec said it does not plan to commit meaningful capital to new developments over the next 18 months and expects committed development exposure to fall below 2% of its portfolio by year-end. It has decided not to pursue the redevelopment of Lewisham, saying returns were insufficiently attractive and preserving the option was holding back leasing at the existing retail center.
The company said it had secured improved planning consent at Finchley Road and was continuing discussions with public-sector partners on its Mayfield project. If viable returns can be achieved, the earliest likely start dates for those schemes would be in 2028.
Simms said overhead costs fell 9% to £29 million in the half year and are expected to remain around £60 million annually, with further efficiencies offsetting inflation. Landsec’s average debt maturity was 8.1 years, almost 90% of its debt was fixed or hedged, and it has no debt refinancing requirement until 2029, she said.
The external valuation of the portfolio rose 0.8% during the half year, while net tangible assets per share increased 1.2%. Following the equity raise and acquisitions, net tangible assets per share were down 2.2% on a pro forma basis.
About Land Securities Group (LON:LAND)
At Landsec, we build and invest in buildings, spaces and partnerships to create sustainable places, connect communities and realise potential. We are one of the largest real estate companies in Europe, with a £12 billion portfolio of retail, leisure, workspace and residential hubs. Landsec is shaping a better future by leading our industry on environmental and social sustainability while delivering value for our shareholders, great experiences for our guests and positive change for our communities.
