Land Securities looks to maximise income

LAND Securities, the UK’s largest property company, today said that maximising income from its multi-billion pound retail and office property portfolio was paramount as it battled some of the toughest real estate market conditions in living memory.

The company said it had failed to secure any new office development lettings in the last three months of 2008 as it experienced an “accelerated deterioration”.

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, is also behind the development of Trinity Leeds – a major city centre shopping scheme that Land Securities is creating in a joint venture partnership with Yorkshire-based Caddick Developments.

“Commercial property has gone through an unprecedented period of re-adjustment,” said Land Securities chief executive Francis Salway. “The speed of valuation decline allied to rising insolvency rates mean the sector is facing one of the most challenging periods in generations.”

The company did not give an update on the quarterly value of its London office and UK retail property assets but said the gloomy economic outlook continued to cause concern.

Land Securities said retail tenants in administration now represented 4.8% of the portfolio’s annual rental income, up from 2.9% at September 30.

In addition, it said the like-for-like rental vacancy level in its retail portfolio, excluding development properties, had risen to 4.7% at December 31 from 4.3% in September.

It secured 14 new retail lettings during the period, generating £1.7m in new rents.

“Looking ahead, the company expects that the rate of deterioration in the market will ease, but the direction will continue to be negative. In light of this the company believes it is following the right strategy to maintain a resilient position through current conditions with a view to being ready to react quickly when the cycle turns”. it said in a statement.