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Retail 'survivors' to pile more pressure on Land Securities and peers, Liberum warns

Broker warns that the industry has yet to fully price the “rising bargaining power of stronger surviving retailers” such as Next

land securities
Land Securities shopping centres include One New Change in London

Forecasting a 25% downgrade in the value of assets owned by the retail property sector, Liberum downgraded its rating on Land Securities Group PLC (LON:LAND) and cut share price targets for two of its peers.

Cut from ‘buy’, LandSec thereby joined British Land Company PLC (LON:BLND) and Hammerson PLC (LON:HMSO) as a ‘hold’, while Intu Properties PLC (LON:INTU) remained a ‘sell’.

READ: Land Securities posts wider loss as tough retail market weighs on portfolio

Last week, FTSE 100-listed LandSec posted a £123mln annual loss before tax as the value of its assets fell 4.1% in aggregate over the year.

Retail asset value declines are being undermined across the sector by the many shopping chains calling in administrators or organising company voluntary arrangements where shops are shut and rents are cut.

“However, we believe the industry has yet to fully price the rising bargaining power of stronger surviving retailers,” Liberum said, noting high street giant Next’s analysis that its rents could need to fall by over 50% in coming years if sales continue to slip.

For the retail real estate investment trusts, the broker said this has prompted further NAV reductions across, calculating the three largest listed owners of UK retail property would like to sell around £3bn of assets in order to reduce exposures.

“Unfortunately there are few buyers at current valuations,” the analysts lamented.

LandSec’s share price target was cut to 950p from 1,000p, Hammerson’s was lowered to 300p from 390p and Intu’s to 85p from 100p. 

Quick facts: Land Securities

Price: 886.8 GBX

Market: LSE
Market Cap: £6.58 billion

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