Property developer Land Securities Group PLC (LON:LAND) posted a wider loss for the year as struggles in the retail sector led to a decline in the value of its assets.
The company, which rents out office and retail space, made a loss before tax of £123mln for the year to March 31, compared to a loss of £43mln.
The value of assets fell by 4.1% in aggregate over the year due to weaker retail markets. That resulted in a 4.6% drop in net assets per share to 1,339p.
READ: Land Securities lifted by Deutsche Bank to ‘buy’ from ‘hold’ in major review of the London office market
Revenue profit increased 8.9% to £442mln, supported by income from completed developments, high occupancy, an increase in rents and the refinancing of some bonds in the previous financial year.
New customer offerings
During the period, the company introduced its new “make your own” (MYO) flexible offices offer, which allow businesses to shrink or expand their workspace according to their requirements.
It has also launched Landsec Lounge, which provides café style communal spaces where businesses can meet.
"We've had a strong year operationally, maintaining high occupancy, expanding our development pipeline and delivering new products and services, including our Myo flexible offer,” said chief executive Robert Noel.
“This is against the backdrop of political gridlock and the well-publicised difficulties in the retail market.”
Land Securities raised its full-year dividend by 3.1% to 45.55p.
Retail woes likely to persist
Looking ahead, the company said it sees no near-term improvement in retail market conditions with company voluntary arrangements likely to continue.
High street retailers have come under pressure from online competition and subdued consumer spending, leading to a number of CVAs - an insolvency process that allows companies to close stores and negotiate lower rents on remaining sites.
Among the slew of retailers that have agreed CVAs are New Look, Mothercare, Debenhams and House of Fraser.
Others, such as HMV, Maplin and Toys R Us, have entered administration.
Land Securities said it will plan to improve its retail destinations to make shopping a better experience for customers.
“We have a clear sense of where current and future opportunities lie and are well placed to address our customers' changing needs, and deliver sustained value creation for our shareholders,” Noel said.
Shares were little changed in morning trading at 888p.
Liberum keeps 'buy' stance
Liberum maintained a 'buy' rating and target price of 1,000p, saying the benefit of the prior year refinancing supported earnings and the company's "relatively resilient" income profile continues to underpin low overall total returns.
"Landsec’s prior repositioning of its retail portfolio is proving increasingly astute, but its residual retail exposure is not immune to market pressure," it said.
"Landsec has also recently lagged peers on London Office development, but is now increasing its pipeline."
Liberum pointed out the shares trade on valuation that is well below the average sector rating, implying there may be some upside from current levels. The stock yields a healthy 5.4%.