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Landsec swings to £192m loss following increase in costs

Tom Shearsmith
15 November 2022

Commercial property giant Land Securities (Landsec) has swung to a £192 million loss for the the H1 period, ending 30 September 2022.

The Bluewater Shopping Centre owner previously reported a profit of £275 million in the same period a year earlier. It saw revenue rise in H1 2022 by 25% to £394 million from £315 million, but recorded a net deficit on revaluation of investment properties of £331 million.

The company has however seen positive leasing performance in Central London offices and major retail destinations, despite general macro challenges. It also noted strong progress on executing its strategy since late 2020, creating "balance sheet resilience and optionality for future growth".

Mark Allan, Chief Executive of Landsec, commented: "The strategy we launched two years ago was underpinned by two key principles of sustainable value creation: focusing our resources on where we have genuine competitive advantage, and preserving our strong balance sheet. At the time, interest rates and property yields were very low, so asset values in many sectors looked expensive. Acting on this, we sold nearly £2bn of mature, low yielding assets while focusing new investment exclusively on opportunities where we saw clear value, or situations which offered long term optionality.

"Our competitive advantages remain our high-quality portfolio, our strong customer relationships, and the ability to unlock complex opportunities through our unique expertise, all of which is evidenced by our strong operational performance in the half year. Our business remains underpinned by a strong balance sheet, with a low 31% LTV, long 9.8-year average debt maturity and no need to refinance any debt until 2026.

"The successful execution of our strategy therefore means we are not only well placed for more challenging market conditions, but also have optionality to take advantage of new opportunities that will no doubt emerge as property markets continue to adjust to a new reality.”

Earlier this year, Landsec and British Land, two of the UK's biggest commercial landlords, reportedly held talks over a major asset swap. The potential £800 million deal would see Landsec acquire 50% of British Land's share in the Meadowhall shopping centre in Sheffield, with British Land in return acquiring Landsec's ten retail parks.

The business also launched a new product offering for retail and hospitality brands to meet "rising demand from digital natives and the rapidly evolving needs of traditional retailers".

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