Land Securities is sitting pretty, on top of a gleaming, fully operational commercial property portfolio. It is gazing up at the sky, seeing clouds spelling out the phrase ‘pre-tax profits of £1.24bn’.
These are the full-year figures posted by the UK’s largest commercial property company, 14.8% up on last year and easily exceeding analysts’ predictions. The results mean it became the FTSE 100’s biggest climber, up 5.8%. On the FTSE 350 Real Estate index, where it is also listed, it climbed 3.4%.
Returns on property investment grew by 17% and rental values by 5% during the year. Like-for-like voids fells from 5.3% to 4.3%. Loan-to-value improved from 43.5% to 39%, with a total business return of 23.6%.
Other companies in the sector were able to jump into the commercial property slipstream; UK property investor and developer British Land’s share price rose 4.6%, and European real estate agency Hammerson’s shares were up 3.2%.
Land Securities’ success is partly attributed to its strategy of reviving office projects in Central London, where most had stalled as the recession began to bite; in the wake of the economy led bouncing back in rents, work has started again. The company has twenty-five projects in construction stage, totalling 6.4m sq ft, including the 37-storey Walkie-Talkie tower, a 230,000 sq ft office complex in Victoria and a 75,000 sq ft office building in Cannon St.
Retail success spread beyond London. The Trinity Leeds development was mentioned in commercial property despatches, already 58% occupied ahead of its 2013 opening. In Glasgow, the 155,000 sq ft Buchanan St project is 69% pre-let on income.
It is London, however, that is cited as the key driver for the positive performance, where over 60% of Land Securities’ assets are situated.
The projected shortage in commercial property in West End and City locations is expected to drive up rental values for the new projects, further boosting Land Securities’ profits and the property market in general.
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