Declining fortunes in the UK retail sector have wiped more than €600 mln off the value of Landsec's portfolio, the company announced as it posted its results for the last financial year.
The UK's largest listed property firm said capital values fell by 4.1% over the 12 months to March, contributing to a valuation deficit of -£557 mln (-€641 mln) and resulting in a loss per share of -16.1p.
Six months ago, Land Securities downgraded its property portfolio by £188 mln to reflect the decline in value of major shopping centres such as the Lakeside park in West Thurrock, which lost 4.5% in the first half of the 2018/19 year.
CEO Robert Noel said the company was rebalancing its portfolio to concentrate on London, where all its £3 bn development pipeline is located. Currently 65% of Landsec's assets are in London. He added that the company was suffering from 'political gridlock and the well publicised difficulties in the retail market'.
Office values in London have remained broadly static, shrinking by just -0.1%, though London retail declined by -3.6%. Across the UK, shopping centres fell by -11.7% in value over the year.
The downward revision of asset values partly explains why Landsec's LTV increased from 25.8% to 27.1%, though its debt level is modest compared to other retail investors and its weighted average maturity of debt remains long at 12.3 years.
Noel said the company was planning to start three speculative developments later this year, spanning a total area of 45,000 m2, as it looks to exploit the shortage of Grade A office premises in the City. Demolition work began in April at One Sherwood Street, a 13,000 m2 mixed-use scheme in Piccadilly.
'We’ve had a strong year operationally, maintaining high occupancy, expanding our development pipeline and delivering new products and services, including our Myo flexible [office] offer,' Noel added.
