For the year ended 31 March 2017, Land Securities’ NAV slipped as it said that its markets are pausing for breath. The chairman says that “In the London office market, we expected the occupational balance to shift from demand to supply during the course of 2017. The Brexit vote brought that inflexion point forward“…”Over the next 12 months, we’re unlikely to see rental values grow in London unless we have more certainty on movement of people and the UK’s terms of trade with the EU and the rest of the world. In the retail sector, the extent to which higher supply chain costs are passed on to customers remains to be seen. Whatever the outcome, higher costs tend to reduce take up of space.”
NAV slips by 1.2%
Land Securities reported a 1.2% fall in its adjusted diluted net assets per share (to 1417p), a 5.7% improvement in its adjusted diluted earnings per share and a 10.1% increase in its dividend to 38.55p.
Their average property returned 3.7% over the year (industry benchmark 4.6%). At Dashwood House, EC2, they completed rent reviews on GBP6m (86%) of the income, increasing the rent by 26%. At One New Change, EC4, they reviewed GBP19m (65%) of the rent increasing the offices by 3% and the retail by 18%. At Cardinal Place, SW1, they reviewed GBP11m (48%) of rent increasing the offices by 14% and the retail by 23%, as well as letting 113,000 sq ft of available space. At 140 Aldersgate Street, EC1, they reviewed GBP1m (44%) of the rent and achieved a 33% uplift, as well as letting 25,000 sq ft of available space.
At Piccadilly Lights, W1, they obtained planning consent to replace the six screens with Europe’s most technically advanced digital screen, maintaining the heritage of the site while giving advertisers innovative ways to interact with more than 100 million passers-by each year. Coca-Cola committed to continuing its 60 year residence and will be joined by Samsung and Hyundai. They have three remaining advertising opportunities and are in discussion with other major brands to complete the line-up. They’ll be launching the new screen at this major tourist attraction in November.
They made no material acquisitions this year but, to reduce risk, they started a disposal programme of weaker assets. Disposals under this programme totalled GBP46m. Trading property disposals of GBP135m include sales at Nova, Victoria, SW1 following completion of residential units, further disposals at Kings Gate, SW1 and the disposal of their remaining interest in the Kodak land at Harrow. Sales of other investments totalled GBP13m.
Development
At 20 Eastbourne Terrace, W2, they completed a major refurbishment during the year, creating 93,000 sq ft of contemporary space in an 18-storey tower overlooking Paddington Crossrail station. The building offers 6,000 sq ft floorplates and a stunning communal rooftop garden. All of the space is now let, on an average lease length of more than ten years at record rents.
In the City, they completed 1 New Street Square, EC4. This 275,000 sq ft scheme was pre-let in its entirety to Deloitte on a 20 year lease.
Nova, Victoria, SW1 completed just after the year-end in April. The scheme features two exceptional office buildings, 170 apartments and a fantastic line-up of restaurants, creating London’s newest food destination. 49% of the 480,000 sq ft office space and 93% of the retail and food-related space is now let. 148 of the apartments have now been sold, 10 of them during the year. The complexities of construction – together with competition for labour in a busy sector – delayed final completion and impacted costs. However, the scheme is proving very popular and they’re confident they’ll let the remaining space in good time. At Nova East, the second phase of Nova, Victoria, they’re finalising statutory approvals ready to start on site when the time is right.
They secured planning consent for 798,000 sq ft of space in three London boroughs. In the City at 21 Moorfields, EC2, they’ve completed demolition and will shortly commence piling and construction of a raft that will sit above the eastern entrance to Liverpool Street Crossrail station, ready for building 522,000 sq ft in two buildings. Completing the raft in July 2018 will mean they can complete construction of the buildings in 24 months, providing an excellent prospect for the pre-letting market.
In Westminster at 1 Sherwood Street, W1 behind Piccadilly Lights, they secured planning consent for a 142,000 sq ft mixed use scheme and in Southwark, at Sumner Street, SE1, resolution to grant planning consent for 134,000 sq ft. They have a further 360,000 sq ft in feasibility at Red Lion Court, SE1.
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LAND : Land Securities NAV slips as markets pause for breath