Landsec returns to profit as London property market stabilises

British property investment trust Land Securities, known as Landsec, swung back into profit and hiked its forecast for the year today after a rebound in occupancy and rental income in London.

Landsec told markets this morning that it had returned to the black in the first half of the year, reporting profit after tax of £243m after a post-tax loss of £193m for the first half of 2023.

The company subsequently raised its outlook for earnings, and now expects the full year to be in line with last year.

Last year’s loss was driven by lower yields due to high interest rates, inflation and a weak property market.

Basic earnings per share rose to 32.8p, after a loss of 24.4p last year, while net debt remained broadly the same, at £3,573m versus £3,594m last year.

EPRA earnings – earnings from operational activities – reached £186m in the six months to September 30, down from £198m in the first half of 2023.

Landsec said the property market had begun to stablise, with growth in rental values driving up the value of its assets.

“We expect these trends to persist, as customer demand for our best-in-class space remains robust and investment market activity has started to pick up,” chief executive Mark Allen said.

Allen added that Landsec has repositioned itself towards “higher-return opportunities” and is confident of its ability to invest in this area in the second half of the year.

For commercial offices, this looks like “high-quality space in best locations” – sustainable, high-tech and modern offices.

“The good availability of credit remains supportive to this [trend], although we are mindful that changes in longer-term interest rates will likely influence the pace at which momentum improves from here,” Landsec said.

In retail spaces, Landsec noted a trend from brand to fewer, bigger and better stores, with “significant upsizes and lettings” from leading brands such as Primark, Pull&Bear, Bershka, Sephora and JD Sports.

The company also has plans for three new residential development schemes. These will be in Finchley Road, Manchester and Lewisham.