Land Securities Lifts Rental Forecast as Retail and Office Growth Strengthens

Land Securities has revised its rental income outlook upward, attributing the change to robust performance across its office and retail holdings. The FTSE 100 property firm now expects like for like net rental income to rise between 4 and 5 percent in 2026, compared to its previous guidance of 3 to 4 percent. Its Epra earnings per share growth is projected to reach the upper limit of the 2 to 4 percent target, prior to accounting for the sale of Queen Annes Mansions, a Westminster office property, to Arora Group.

Despite the positive outlook, the company reported a 0.9 percent decrease in portfolio value to £10.8 billion. This change was mainly due to lower valuations of office properties, prompting shares to drop by 34p, or 5.3 percent, to 613p in Friday trading. The interim dividend has been increased by 2.1 percent to 19p per share. For the six months ending September, Land Securities posted profit before tax of £98 million, down from £243 million in the corresponding period last year.

Net rental income from office assets grew by 6.8 percent year on year, with occupancy increasing to 98.8 percent. The company disposed of £295 million of office properties ahead of schedule, noting a gradual improvement in investment market activity. It plans to complete £866 million of developments within the coming six to nine months. Over the period, the companys portfolio valuation declined by 1 percent.

Retail properties also performed well, with net rental income up by 5 percent and occupancy rising to 96.7 percent. The valuation of the retail portfolio increased by 2.3 percent, and management indicated the market was presenting more acquisition opportunities. Land Securities has made clear its intention to direct new investment towards the retail sector over the next 12 to 18 months, attracted by the potential for continued income growth, but does not anticipate committing significant capital to new development in the near term.

In the residential sector, the business secured detailed planning permission for 879 homes at Mayfield in Manchester and outline approval for 2800 homes at Lewisham in southeast London. The majority of the companys 9000 home pipeline has now obtained planning consent. Land Securities aims to expand its residential holdings to form approximately a quarter of its portfolio by 2030, capitalising on the ability of the asset class to capture inflation through annual rent reviews.

Chief executive Mark Allan commented on the companys strategy, highlighting the importance of careful portfolio management and the pursuit of sustainable earnings per share growth as a priority. Recent strategic moves, Allan noted, have left the company well placed to navigate the evolving real estate landscape.