Landsec portfolio valuation dives on higher interest rates

EPRA earnings totalled £198m in the six months to 30 September, flat on last year, while EPRA earnings per share was more or less unchanged at 26.7p – in line with full-year guidance.

The company still expects to generate EPRA EPS for the full year to be broadly stable compared to last year's underlying 50.1p.

However, Landsec recorded a loss before tax of £193m for the first half, in line with last year, driven by a -£375m movement in the portfolio value, blaming the significant increase in interest rates holding back transaction volumes.

EPRA net tangible assets per share were 893p, down 4.6% on the same period the year before.

The company announced an interim dividend of 18.2p per share, up 3.4% on last year and in line with its guidance for low single-digit percentage growth.

Looking forward, Landsec said investment activity remains "subdued for now" but recent economic resilience and relative stability in long-term rates means that activity levels should pick up in 2024.

"The refinancing of cheap debt issued before 2022 across the sector remains a challenge, but the apparent availability of new equity and mezzanine finance to plug gaps in the capital stack means that we see the risk of disorderly sales putting significant pressure on the value of high-quality assets as lower than six months ago. As a result, for the best assets we expect values will start to stabilise during 2024, although secondary assets where the sustainability of cashflow is questionable will likely continue to fall."