Turnaround in property swings Land Securities back into profit

Published on Wednesday 19 May 2010 19:26

THE company behind some of Scotland's biggest retail developments, including Livingston's The Centre, has hailed a "dramatic turnaround" in the commercial property market after swinging back into profit.

• Land Securities – which counts The Centre in Livingston among its Scottish assets – talked up the commercial property market. Picture: Complimentary

Land Securities yesterday posted group pre-tax profits of 1.07 billion for the year to 31 March – reversing a 4.7bn loss previously – after the value of its portfolio rose by 10.3 per cent to some 9.5bn.

North of the Border, where the firm co-owns Glasgow's Buchanan Galleries and the Bon Accord and St Nicholas shopping centres in Aberdeen, the assets are valued at 640 million – an increase of 7.8 per cent over the year.

Katherine Armstead, portfolio manager for Land Securities in Scotland said: "Our Scottish shopping centres have continued to perform well and attract significant interest from retailers.

"Over the past year, we have let around 420,000sq ft of retail space across our Scottish portfolio in Aberdeen, Glasgow, Dundee and Livingston, attracting a diverse range of retailers."

The full-year results revealed a 16.5 per cent rise in the group's net asset value (NAV) – a key industry measure – to 691p a share, in line with analysts' forecasts following the end of a sector slump last summer. A full-year dividend of 28p was recommended, matching the company's previous guidance.

Land Securities also unveiled a massive London development push predicated on a continued jobs spurt across the city.

Britain's biggest listed property firm confirmed it was in talks to build a skyscraper popularly known as the Walkie Talkie, on Fenchurch Street, as a shortage in prime City offices loomed.

Chief executive Francis Salway said: "As rental values rise in London, it is development and development sites that are expected to show best performance."

The firm is one of several quoted developers revisiting abandoned development plans that could collectively transform London's skyline.

JPMorgan Cazenove analyst Harm Meijer said: "After strong full-year results from British Land, the market may have hoped for an NAV above 700p ... however, we believe Land Securities is a play for the next stage in the cycle once rental growth materialises."

Panmure Gordon analyst Andrew Saunders said the firm's strong position in the London office and retail sectors should stand the business in good stead.

"There is growing tenant demand for new space coupled with a scarcity of new schemes scheduled for delivery in the next two years and this should translate into continued rental growth in our view," he said.