EUROPE - London office and prime retail delivered Land Securities returns 5% above IPD across its core sectors, according to full-year figures released this week.

The UK REIT, which has two pension schemes as major shareholders, posted revenue profit up 9.1% to £274.7m (€309.2m).

Valuations of its City office portfolio were up 12%, with an increase in central London retail of 21.5%. London office makes up 54.3% of the portfolio, compared with 45.7% in retail.

The firm attributed its outperformance partly to a 19.4% increase in its £1.1bn development assets. 

Claiming an early mover advantage, chairwoman Alison Carnwath said the most successful businesses "were likely to be those that take a highly active approach to creating value in the portfolio, and do not just rely on market movements".

The firm forecast supply constraints in London office as a result of development projects halted during the downturn, and a wave of lease expiries from 2013 that the firm believes tenants will exploit to move to new buildings.

Chief executive Francis Salway said the pick-up in London offices had been stronger than expected. He anticipated "an acute shortage" in new buildings in London from the middle of 2012.

Meanwhile, the NOK3.1trn (€393bn) Norway Pension Fund Global has been building up its shareholding in the firm. It increased its shareholding to just above 3% in January and to almost 5% the following month.
Although the fund does not comment on its equity holdings, spokesman Øystein Sjølie acknowledged the shareholding had been building up as the fund sought otherwise to reduce its exposure to European equities.

"The fund is overweight in Europe, and the UK is the largest market in Europe," he said.

NBIM, which manages the fund, last summer proposed re-weighting European equities to 'neutral'.

"The ministry has agreed, but it will take time," said Sjølie. "It won't be an immediate reduction."

The oil fund has 60% of its portfolio in equities, including property equities, 35% in fixed income and 5% directly invested in real estate. It invests in more than 1,000 listed companies in the UK.

Dutch pension manager APG is also among Land Securities' top five shareholders, with 3.85%.
 

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