Landsec to switch focus to acquisitions

17th May 2024 | Jack Oliver

Landsec has said it will focus on acquisitions for the remainder of the year, as the real estate investment trust (REIT) looks to invest funds it has accrued through disposals.

The REIT has completed £617m worth of non-core asset disposals since September, including the sale of some retail centres and its entire hotel portfolio.

Following these sales, Landsec has now disposed of £3.1bn of the c.£4bn worth of assets it said it intended to sell over a six year period, following the launch of its strategy in late 2020. The group said it is aiming to recycle the proceeds of its hotels disposal into opportunities in major retail.

Landsec added that it would be making an accretive investment of c.£100m into its existing retail destinations over the next three years, and said it will continue to recycle capital where assets do not meet its return requirements or strategic focus.

Mark Allan, chief executive of Landsec, said: “Our continued operational outperformance, with rising occupancy and positive rental uplifts in retail and London, is driving robust like-for-like rental income growth and demonstrates the importance of owning and operating the best-in-class real estate. Around 80% of our portfolio is now invested in twelve places with significant scarcity value, where our competitive advantages in shaping and curating these places mean we expect like-for-like rents to continue to grow.

“Following a reset of values over the past two years driven by rising interest rates, the stabilisation in rates and evidence of continued rental growth is starting to attract increased investor interest for the best assets. Around 60% of our portfolio already showed stable values in the second half and overall yields were largely stable in the final quarter, pointing to a positive outlook for our overall return on equity.

“The quality and return prospects of our portfolio are further bolstered by our strong balance sheet. After a period of proactive capital recycling, most recently with over £600m of non-core assets sold in the past seven months, we have meaningful capacity to invest in high quality assets that add to our best-in-class portfolio at what we believe to be an attractive point in the cycle.”

This comes as the REIT releases its final results for the 2024 financial year, a period which during it recorded EPRA (European Public Real Estate Association) earnings of £371m, down from £393m the previous year. During the year ending 31 March 2024, Landsec made a loss of £341m, up from a loss of £622m in 2023.


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