Large-cap real estate investment trust (REIT) Land Securities Group PLC (LSE:LAND)’s interims were “consistent with management messaging of a broadly flat year for earnings”, according to analysts at Shore Capital Markets.
Today’s earnings call showed that LandSec's underlying rental growth has been offset by factors such as previous disposals, start-up costs for three flexible office locations, and the decline of over-rented retail assets.
Earnings per share stood at 26.7p, aligning with forecasts, while the full-year expectation remains at 50p.
Despite macro challenges, the dividend has seen a 3% increase to 18.2p at the interim stage.
Shore Capital Markets highlighted the resilience of the West End in London's office market, which significantly outperformed the City with a lesser decline in value.
According to Shore Cap, Landsec's strategic shift towards the West End and mixed-use developments is a move in the right direction, despite the broader challenges facing the office sector.
The firm's developments in the West End are expected to contribute positively to the portfolio value in an improving London investor market.
Landsec's investments in Victoria have also shown promising results.
The area, which constitutes nearly half of Landsec's Central London business, has transformed from a predominantly government-leased area to a vibrant, multi-use estate.
Shore Cap noted that Landsec's office portfolio in Victoria is now fully let, with developments like n2 and Lucent in Piccadilly showing strong occupier demand and rental growth.
The upcoming Thirty High development, expected to be completed in 2025, is anticipated to yield about 7.5% on its £400 million development cost, further solidifying Landsec's strong position in Victoria.
Broadly speaking, LandSec’s portfolio “looks in broadly good shape”, a position “increasingly at odds with the currency share price”, stated analysts.
LandSec currently has an implied discount of 28% against Shore Cap’s revised full-year estimates, though this wasn’t enough to budge Shoe Cap’s recently upgraded hold position on LandSec stock.