Land Securities shows it has a winning formula

LAND Securities, the UK’s leading real estate investment trust, is bucking the economic slump with profits and property investement sales both up.

The developer, which boasts more than 50 retail parks and shopping centres in its portfolio including the White Rose shopping centre in Leeds and Birmingham’s Bullring, saw revenue profits rise by 13.3% for the six months to September 30.

Loan to value stood at 43.5% for the group with resilience of income for vacancy rates up slightly to 4% compared to 3.4% in March.

Property investment sales grew marginally by 1.7% to £181.5m.

Group debt was down by £175.1m. However the impact of falling property values saw debt ratios increase.

Despite a slump in the retail sector, the White Rose shopping centre saw a rise in like-for-like footfall with more than a million shoppers going through its doors each month.

Land Securities said that the period also saw the successful closure of the largest contract to date in the Building Schools for the future programme with Kent County Council.

It said 13 projects had been sold into the Trillium Investment Partner fund delivering £17.3m net profit.

However, it said that although the benefits of a demerger from Trillium had been recognised by the board, adverse market conditions had caused work on the process to be stopped. It said that evaluation of a sale process for Trillium continued in the meantime.

Commenting on the results, Francis Salway, Land Securities’ chief executive, said:
“Our results reflect the fact that we are going through an unprecedented period of financial instability which has severely impacted investor confidence, the availability of credit and the pricing of property investments.

“Although we are by no means immune to the prevailing market conditions, the fundamentals of our business continue to be sound as a result of the resilience of our income streams.”

He added that the firm’s objective was to navigate a prudent line through the current volatilities and to continue to manage the business with a cautious outlook.

“Land Securities has been successful by being strong in managing day to day operations, while maintaining a long-term perspective on value generation. This combination will continue to guide our actions,” he added.

The group is also behind the development of Trinity Leeds – a landmark scheme that Land Securities is creating in a joint venture partnership with Caddick Developments.

Site preparation work is well under way in readiness for the start of construction, which will see the creation of a one million sq ft shopping destination on the prime pitches of Briggate and Commercial Street.