ii view: Land Securities back in profit and prepped for housing debut

Full-year results to 31 March

• Pre-tax profit of £393 million, up from a loss of £341 million
• Adjusted net asset value (NAV) per share up 1.7% to 874p
• Final dividend of 12.3p per share
• Total dividend for the year up 2% to 40.4p per share
• Adjusted net debt up 22% to £4.3 billion

Chief executive Mark Allan said:

“Owning the right real estate has never been more important and, with a very healthy pipeline of occupier demand, this trend looks set to continue, providing a clear trajectory for further near and medium-term EPS growth.”

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ii round-up:

Land Securities Group (LSE:LAND) today reported a return to annual profit, as the major UK property owner continued to readjust its portfolio away from areas like ageing hotels towards sectors like major shopping developments and eventually some housing.

A profit of £393 million for the year to late March contrasts with a loss of £341 million in 2024, aided by stabilised property values and ongoing cost savings. A 5% rise in like-for-like net rental income helped deliver a final dividend of 12.3p, payable to eligible shareholders on 25 July. That takes the total payment for the year up 2% to 40.4p per share. 

Shares in the FTSE 100 property firm fell 2% in UK trading having come into these latest results up by a similar amount year-to-date. That's marginally below a near 5% improvement for the FTSE 100 index in 2025. UK property giant and provider of warehousing for e-commerce, Segro (LSE:SGRO), is down 5%. 

Land Securities' properties include offices in the City of London, interests in both Bluewater and the Liverpool One shopping complexes as well as the BBC occupied MediaCity development near Manchester. 

An adjusted net asset value (NAV) of 874p per share rose from 859p a year ago. The value of its Central London portfolio rose 1%, with occupancy rates up 1.2% to 98% and rental incomes growing 6.6%. 

Values for Land’s major Retail property portfolio rose 3.4%, with occupancy rates improving 1.1% to 96.6% and rental incomes rising 5.1%. 

Elsewhere, the company is progressing the preparation of sizeable residential developments with completed builds expected in 2026. This is part of management’s push to invest £2 billion-plus in the sector by 2030. 

ii view:

Started in 1944, today the groups property portfolio spans 23.5 million square feet. Properties range from Piccadilly Lights in the West End and the regeneration of London’s Victoria, to the creation of retail destinations at Westgate Oxford and Trinity Leeds. Property sales of £3.3 billion since 2020 and subsequent investments have pushed an optimising of central London properties, a readjusting of retail towards destination outlets and moves into mixed usage but residential-led properties. 

For investors, the possible impact of trade tariffs on inflation could mean interest rates stay higher for longer. The increase in UK national insurance contributions could cause challenges for the group’s smaller retail businesses. Net debt rose to £4.3 billion and compares to a stock market value of £4.45 billion, while this year’s total dividend of 40.4p per share remains below the 45.55p paid in the pre-pandemic 2019. 

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For the positives, property values have at least stabilised, potentially assisted by interest rate cuts. A broad focus on destination developments persists. A move into residential property and away from areas such as hotels has been made. Average group debt maturity sits at close to 10 years with no need to refinance any debt until 2027, while the share price still sits at a discount to the NAV of 874p per share. 

For now, and while the uncertain economic outlook overhangs, a sizeable share price discount to NAV and generous forecast dividend yield in the region of 6.5% are likely to generate investor interest. 

Positives: 

• Discounted valuation
• Attractive dividend yield (not guaranteed)

Negatives:

• Uncertain economic outlook
• Rise of e-commerce shopping

The average rating of stock market analysts:

Buy