LandSec hit by £5bn fall in value of properties

Published on Wednesday 13 May 2009 21:39

LAND Securities, the property giant behind some of the UK's biggest shopping centres, yesterday unveiled a pre-tax loss of £4.77 billion and admitted the value of its portfolio had tumbled by almost £5bn.

The deficit, for the year to the end of March, is almost five times bigger than the previous year's 988m loss, while the firm's investment portfolio is now valued at 7.93bn.

The firm, which is behind 27 malls across the UK, including The Centre in Livingston and Glasgow's Buchanan Galleries, added that the economic outlook for the rest of the year "remains murky".

Shares in LandSec slid 13 per cent to close at 468p.

Earlier this year, Britain's biggest commercial property firm tapped investors for 756m – offering a hefty 51 per cent discount on its share price in a bid to raise funds to shore up its balance sheet.

Unveiling the full-year numbers yesterday chief executive Francis Salway said: "This year the UK commercial property sector saw the sharpest fall in capital values on record as the full severity of the economic downturn hit the sector.

"Our portfolio was not immune to the market correction and we moved quickly to take the necessary actions to strengthen our balance sheet and create resilience in a difficult and deteriorating environment."

LandSec said that, at the year end, it was experiencing higher void levels – empty units – than in the downturn of the 1990s, with companies representing about 3.8 per cent of its total income in administration.

Chairman Alison Carnwarth added: "The next 12 months will continue to make great demands on us all. The economic outlook remains murky."

On a brighter note, LandSec said its Elements extension to The Centre – formerly the Almondvale Shopping Centre – in Livingston, which opened last October, was now 80 per cent let.

The company also revealed that footfall at the centre has risen 37 per cent since the new section was opened.

Meanwhile, its Scottish Retail Property subsidiary – a joint venture with rival British Land, which includes the Bon Accord and St Nicholas shopping centres in Aberdeen – generated 10.6m in revenue over the year, according to the results.

LandSec's other Scottish joint venture, the Buchanan Partnership, which in October landed planning permission to extend the Buchanan Galleries, made 11m in revenues.

Katherine Armstead, portfolio manager for LandSec in Scotland, said: "Despite tough market conditions our Scottish shopping centres continue to attract a diverse range of quality retailers."

She added: "The economic downturn has not diluted our commitment to offering customers as much choice as possible, and the fact we have continued to secure lettings during these challenging times is testament to this."