Land Securities to split into three separate companies

Land Securities, the largest real estate investment trust (REIT) in the UK, confirmed on Wednesday that it plans to split into three separate listed companies: retail, London and outsourcing. Land Securities has investment property assets valued at £15 bn (EUR 21.2 bn) but its shares, like those of its peers, have fallen sharply since major UK property companies converted to tax-efficient REIT status at the beginning of 2007. Land Securities' shares have dropped over 30% since January.

CEO Francis Salway said the decision to consult shareholders on the three-way demerger followed the completion of a strategic review of the business. He made the announcement as Land Securities reported a fall in first-half pre-tax profit from £1.18 bn to £375 mln.

Land Securities stressed the split into separate companies would only take place with the consent of the shareholders, and 'when the preparatory work has been completed and only when market conditions are favourable'.

In its interim report, the company said: 'this change will represent a continued evolution of the company's business model. In 2004, the group demonstrated its preference for a focused, sector-based approach by exiting industrial property and moving the group structure to one built around the retail, London and outsourcing sectors rather than the functions of asset management, development and outsourcing. Since this time, the group has developed three specialised business divisions, which have enjoyed strong growth and each of which has considerable scale and leadership positions within their respective peer groups.'

Land Securities added that the three divisions have performed well under the current diversified structure, 'but the business models are distinctive and have different financial characteristics'.

Segro, another British REIT which is also active in Continental Europe, was also reported to have launched a strategic review of its business earlier this year.

Separately on Wednesday, Land Securities and UK supermarket chain Sainsburys announced a property joint venture to 'unlock the development value' at three of stores. Click on the link below for more details.