Landsec swings to basic loss as dividend increases

The FTSE 100 company swung to a loss before tax of £251m, however, from a profit of £112m in the 2017 financial year.

That made for basic losses per share of 32.9p, compared to earnings of 14.3p per share in the prior financial year.

Its adjusted diluted earnings per share rose 9.9% to 53.1p, with the board confirming a 14.7% increase in the dividend to 44.2p per share.

Basic net assets per share slid 2.7% to 1,418p, while adjusted diluted net assets per share slipped 1% to 1,403p.

Landsec’s group loan-to-value ratio was 25.8% at year-end, compared to 22.2% 12 months earlier.

"Landsec has had an active and successful year,” said chief executive Robert Noel.

“We continue to deliver outstanding destinations and experiences for our customers and communities across the UK, while addressing the big drivers of change in our market sectors.”

Noel said the company had one of its best years for leasing space.

“We bought and sold well, returned capital to shareholders and continued to reduce our cost of debt.”

On the operational front, Landsec made £23m of investment lettings during the year, and £48m of development lettings including the pre-let at 21 Moorfields, EC2.

Acquisition, development and refurbishment expenditure totalled £534m for the year, while the company made disposals of £1.1bn.

A total of £1.5bn in bonds was repurchased during the period, along with £1.4bn of new issuances.

Landsec made a capital distribution to shareholders of £475m during the year, accompanied by a 15-for-16 share consolidation.

The board also highlighted its support for the 1,000th person from a disadvantaged background into employment through its Community Employment Programme, which was launched in 2011.

It said more than five million visits were made each week to its properties.

Looking at the performance of Landsec’s portfolio for the year, the board reported an ungeared total property return of 4.3%, and a total business return of 1.8%.

Its combined portfolio was valued at £14.1bn, with a valuation deficit of £91m or 0.7%.

During the year, it turned a profit on disposals of £99m, with voids in the like-for-like portfolio standing at 2.4% at year-end, compared to 2.9% at the end of the 2017 financial year.

“We've worked on both sides of our balance sheet during the year, returning £475m to shareholders and refinancing over £1.5bn of our bonds which reduced our weighted average cost of debt to 2.6% and lengthened its duration to 13.1 years,” Robert Noel explained.

“The cost of this refinancing was behind both our loss for the year of £251m and the slight reduction in adjusted diluted net asset value per share to 1,403p.

“Revenue profit increased by 6.3% to £406m and adjusted diluted earnings per share rose by 9.9% to 53.1p.”

The successful leasing of Landsec’s speculative development programme, combined with the increase in adjusted diluted earnings per share, saw the board recommend a final dividend of 14.65p which increased the dividend for the year by 14.7%, Noel added.

He also noted that in London, Landsec completed 560,000 square feet of mixed use space at Nova, which was now 97% let.

“We sold 20 Fenchurch Street, crystallising exceptional returns for shareholders.

“We pre-let and started construction of 564,000 square feet at 21 Moorfields, and made good progress with a number of future development opportunities.”

In retail, the company opened Westgate Oxford which was now 96% let or in solicitors' hands, and acquired three new outlet destinations for £333m.

Looking ahead, Noel said the company was working up feasibility plans for significant mixed use development at its suburban London retail assets, and would be enhancing our outlets.

“The business is in a strong position,” Robert Noel said.

“Our portfolio is well let and adaptable to changing customer expectations.

“In a market facing short-term uncertainty, we have conservative gearing, market-leading debt facilities and a growing pipeline of opportunities for the future.”