Land Securities has announced results for the year ended 31 March 2016. Over that period its NAV rose by 10.3% to 1482p and its adjusted, diluted NAV rose by 10.9% to 1434p. Revenue profit rose by 10% to £362.1m and this pushed adjusted, diluted EPS up 10.1% to 45.7p. From this they declared dividends totalling 35p, up 9.9% on the previous year.
Net rental income increased by GBP4.2m this year. The increase was driven by GBP28.2m of additional income from developments, principally 1 & 2 New Ludgate, EC4; 20 Fenchurch Street, EC3; and 62 Buckingham Gate, SW1. Like-for-like growth of GBP13.0m is mainly due to new lettings and rent reviews, and includes GBP4.1m of surrender receipts. Increased net rental income from acquisitions of GBP11.2m largely relates to our 30% interest in Bluewater, Kent acquired part way through the previous financial year. Offsetting these increases is a GBP51.1m reduction in net rental income from properties sold since 1 April 2014, with the largest impact coming from the sale of Times Square, EC4 in London and the sale of retail assets in Bristol, Livingston and Exeter. The effect of disposals will continue to be felt in reduced rental income next year as a number of asset sales occurred towards the end of the financial year. In total, assets which have now been sold contributed GBP36.4m of net rental income in the financial year. Interest savings from the disposal proceeds will only partly compensate for this lost rental income in the year ahead.
Overall, values were up by 7.0%, with the like-for-like portfolio up by 5.5% largely due to rental value growth. Within the like-for-like portfolio, shopping centres increased in value by 4.3% predominantly due to rental value growth and a small reduction in yields. The value of retail parks was down 1.0% as yields softened slightly. Leisure and hotels reported a 6.2% valuation surplus as a result of rental value growth and yield reduction. London offices saw values rise by 6.3% with rental values up by 10.6% and yields moving outwards by six basis points. In general, yields of London offices have reduced over the year but our yield movements have been impacted by the change in approach between valuers (they switched from Knight Frank to CBRE).
Outside the like-for-like portfolio, completed developments increased in value by 12.4% due to a 47 basis points reduction in yields and rental values up by 6.5%. Within acquisitions, the value of our 30% interest in Bluewater increased in line with the overall Retail Portfolio while Buchanan Galleries, Glasgow declined as they put the development on hold. The development programme valuation surplus was 16.6% due to letting successes on all our major schemes.
Profits on disposals relate to the sale of investment and trading properties. They made a profit on disposal of investment properties (on a proportionate basis) of GBP78.7m, compared with GBP132.7m last year. For transactions agreed during the year, the profit on disposals represented a 9.1% surplus over 31 March 2015 values and was largely attributable to the sale of Thomas More Square, E1; Holborn Gate, WC1; and Haymarket House, SW1.
They made a profit on disposal of trading properties of GBP40.7m, compared with GBP31.5m last year. The trading profits largely relate to the sale of 86 apartments at Kings Gate, SW1, a residential building we completed this year. The majority of the apartments were pre-sold off plan but they only recognise the sale once legal completion occurs.
The loan to value ratio fell to 22% from 28.5%. Their syndicated revolving credit facility was increased to GBP1.38bn this year and is available to the company until at least 2021. They also repurchased our 4.875% GBP400m bond as the lack of remaining duration to its expected maturity in 2017 meant it was no longer part of their long-term financing considerations.
LAND : Land Securities reports 10% NAV growth