Downside priced in at Landsec, Shore Capital upgrades to 'hold'

The company remains a business "in transition", according to analyst Andrew Saunders, as it shifts from a legacy London office/retail landlord to one with better exposure to mixed-used and urban regeneration and sectors where it has a competitive advantage. However, downside has now been priced in, he said.

Landsec held a capital markets day this week in which it showcased completed new West End developments. "The event looked at two recent completed developments – n2 in Victoria and Lucent in Piccadilly. Both demonstrated Landsec’s ability to deliver complex projects within existing central London infrastructure and also provide appealing multi-use spaces that can perform for occupiers in a changing work environment," Saunders said.

"We believe investor sentiment should now start to warm to the stocks with office exposure here and, in our mind, Landsec’s event yesterday looks particularly well-timed."

Saunders also reckons that the market mood towards real estate investment trusts in general should begin to improve as the UK interest-rate cycle reaches its peak.

"While there remain wider challenges for the office sector at large, Landsec’s wider portfolio also looks in broadly good shape. This position is increasingly at odds with the current share price – that implies a 30% fall in the portfolio value in FY24F," Saunders said.

The stock was up 2.% at 586.4p by 0929 BST.