Land Securities Group Plc Land Securitiesgroup Half-Yearly Results For Six

Thursday, 10 November 2011

Results summary

 

30 September 2011

31 March 2011

Change

Valuation surplus (1)

£211.5m

N/A

2.1%

Basic NAV per share

920p

885p

Up 4.0%

Adjusted diluted NAV per share (2)

863p

826p

Up 4.5%

Group LTV ratio (1)

37.7%

39.0%

 

 

Six months ended 30 September 2011

Six months ended 30 September 2010

Change

Profit before tax

£378.9m

£455.3m

Down 16.8%

Revenue profit (1)

£159.3m

£135.9m

Up 17.2%

Basic EPS

50.0p

59.5p

Down 16.0%

Adjusted diluted EPS (3)

20.5p

17.6p

Up 16.5%

Dividend

14.4p

14.0p

Up 2.9%

 

1     Including share of joint ventures

2     Our key valuation measure

3     Now excludes profits on disposal of trading properties and long-term development contracts. The comparative has been adjusted accordingly.

  • Valuation surplus of 2.1% or £211.5m since March 2011
  • Property sales of £195.6m at an average of 10.2% above March 2011 valuations
  • Adjusted diluted NAV per share up 4.5% since March 2011
  • Outperformed IPD Quarterly Universe by 1.0%
  • Revenue profit of £159.3m, including some £13m of non-recurring items, up 17.2% on the six months ended 30 September 2010
  • Rental values up 1.6% across the like-for-like portfolio since March 2011
  • Group LTV ratio including share of joint ventures down to 37.7% (39.0% at 31 March 2011)
  • Voids in the total like-for-like portfolio reduced to 3.4% (4.1% at 31 March 2011), of which 0.8% is subject to temporary lettings
    • Retail Portfolio like-for-like voids reduced from 4.7% to 3.6%
    • London Portfolio like-for-like voids reduced from 3.4% to 3.3%
  • Units in administration remain unchanged at 0.4%
    • Retail Portfolio units in administration up from 0.6% to 0.7%
    • London Portfolio units in administration down from 0.2% to 0.1%
  • £22.6m investment lettings across the portfolio. Lettings at 5.8% above ERV (excluding turnover lettings)
    • Investment lettings in the Retail Portfolio at 2.9% above ERV (excluding turnover lettings)
    • Investment lettings in the London Portfolio at 7.7% above ERV
  • Weighted average unexpired lease term across the like-for-like portfolio, completed developments and acquisitions of 8.9 years
  • Developments continuing to contribute positively to returns - with a valuation surplus of 6.6% in the six month period
  • Of the £1.6bn of developments started since January 2010, already over 50% de-risked through site sales, pre-lettings and residential sales
  • £3.9m of development lettings and a further £3.3m in solicitors' hands in the period
  • 110 Cannon Street, EC4, development site sold for total consideration of £48.5m crystallising early virtually all of our anticipated development surplus
  • Garratt Lane, Wandsworth supermarket and development site sold by Harvest joint venture for £25.7m (our share) ahead of work starting on site
  • 58 out of 59 residential apartments at Wellington House, SW1 now pre-sold
  • Trinity Leeds development letting progress to plan with 54.0% pre-let and a further 6.7% in solicitors' hands
  • 185-221 Buchanan Street, Glasgow letting progress ahead of plan with 73.5% pre-let and a further 17.2% in solicitors' hands
  • On site with 78,390 sq m (our economic share) of development schemes in London
  • Planning consent obtained for 35,020 sq m at 30 Old Bailey and 60 Ludgate Hill, EC4, and resolution to grant consent obtained for 54,900 sq m at 1 New Street Square, EC4 and Kingsgate House, SW1
  • Progress on a 113,000 sq m pipeline (our economic share) of retail schemes creating smaller occupier-led development opportunities, with four planning applications already submitted for food stores
  • Group LTV ratio including share of joint ventures down to 37.7% (39.0% at 31 March 2011)
  • Average debt maturities at 11.0 years
  • Positive discussions on refinancing of revolving credit facility
  • Capacity to invest in acquisition opportunities

Commenting on the results, Land Securities Chief Executive Francis Salway said:

"Our continuing progress in the period reflects our focus on operations at every level.  We have reduced vacancy rates, secured lettings above estimated rental value and achieved sales above the March 2011 valuation.  Revenue profit has increased and our balance sheet is stronger, with lower gearing and capacity to invest in acquisition opportunities as and when they arise.

"We are operating in a challenging environment and we expect pressures in managing occupancy rates to continue.  However, we have been encouraged by our first half performance and by both the number of enquiries on our development schemes in London in the last quarter and also our progress on pre-letting our retail developments. Our strong balance sheet and excellent customer relationships give us confidence in our ability to respond and adapt to evolving market conditions.

"We have a pipeline of opportunities within the portfolio to grow shareholder returns allied with a strong balance sheet to withstand economic fluctuations.  We are alive to the potential effects of economic uncertainty and changeable sentiment in the capital markets.  We have consistently stated that we did not expect to see a straight-line recovery in our market and we see no reason to adjust this outlook.  We also believe that market uncertainty may well generate buying opportunities, as the balance between buyers and sellers shifts for some property types."

 

North West regional perspective:

James Larmuth, Land Securities' portfolio manager, said: "St Johns shopping centre has attracted 9.4 million shoppers already this year, an increase of 840,000 year on year, demonstrating that the centre is a major draw on the Liverpool high street.

"Consumers are taking more time to shop around for items and researching where to find the best deals so that every single pound works as hard as it possibly can.

"We are striving to cater for these shopping habits by adding more value brands, such as Aldi and Home Bargains, and quality, independent, fast-fashion retailers such as Kiss, Storm, Pretty Plus, Twist and Rebellious, to the centre's retail offer, and we will continue to work hand in hand with retailers to strengthen the diversity of stores for our shoppers.

"But while shoppers are quick to cut corners on costs, what they don't want to compromise on is high quality customer service and this is a massive opportunity for our retailers to add value.

"We're really passionate about our centre delivering even greater customer service so we pushed forward research from City Central. The feedback was hugely positive with four stores scoring 100 percent and we'll continue to help our retailers provide excellent customer service each and every day."

It's been a busy year of progression at St Johns. The centre launched the city's second Shopmobility service through a partnership with Local Solutions and Liverpool's City Central Business Improvement District (BID). It also delivered Britain's first privately paid for city centre 'cop shop'.

This public-private sector partnership sees Merseyside Police occupy a fully fitted base, provided by Land Securities and with the rent paid for by businesses via the BID, for the next three years.

The arrival of the St Johns Police Access Point has been an outstanding success. The presence of the police team has reduced anti-social behaviour and means the security team spends more time on patrol and assisting shoppers. Land Securities has also had a good response from its retailers who agree the Police Access Point is a fundamental asset to the centre.

James concludes: "Deploying a robust asset management strategy, ensuring our retailers deliver outstanding customer services and continuing to attract the right retailers to the centre, means we approach 2012 in the strongest position."

 

- Ends -

 

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