One New Change entrance detail, 2016. Fred Romero / Wikimedia Commons, CC BY 2.0. Cropped.
British property owner Landsec reported faster rent growth but flat underlying earnings for the first half of its financial year, as income from its buildings and lower costs offset the loss of earnings from a property sale.
The company said Nov. 13 that like-for-like net rental income rose 6.2% in the six months ended Sept. 30. Its EPRA earnings, an underlying profit measure used by property companies, held at £192 million. Earnings per share edged up to 25.9 pence from 25.8 pence a year earlier.
Landsec’s half-year results announcement pointed to stronger demand for its shopping centres and London offices. Its interim dividend rose to 19.4 pence a share from 19 pence.
Higher rents, but little change in total income
Rent growth on properties held in both periods was stronger than the change across the whole business. Total net rental income rose 1.1% to £287 million, with a large property sale last year reducing the income Landsec could collect.
A 9% reduction in overhead costs also helped keep underlying earnings steady. The company’s reported pretax profit rose more sharply, to £243 million from £98 million, helped by an £88 million increase in property values. That valuation gain is separate from money earned by collecting rent.
In its retail portfolio, occupancy reached 97.8%. Landsec said rental uplifts on relettings and renewals had increased to 17%; the detailed half-year section reported 15% for the period itself. Sales at its retail properties rose 3.7%, compared with a 1.4% fall in the national measure cited by the company.
Shopping-centre purchases change the outlook
After the half-year ended, Landsec bought Metrocentre in Gateshead for £516 million and an additional 10% stake in Bluewater for £95 million. The Bluewater purchase took its holding to 74%. These were October deals, not acquisitions first announced with the November results.
The company raised a gross £500 million in new equity to help fund the combined £611 million investment. It said the purchases should add to earnings in their first year and now expects a high-single-digit percentage increase in EPRA earnings per share in its 2028 financial year. For the current 2027 financial year, it still expects that measure to remain broadly flat.
The outlook is not a promise. Landsec said higher interest rates have slowed parts of the investment market, and it is limiting new development commitments. It also disclosed a delay of up to six months at its Thirty High office project in London, though it does not expect that delay to materially change its earnings guidance.
JBizNews Desk | New York
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