Land Securities Group PLC (LON:LAND) tumbled to an £835mln half-year loss before tax but has reinstated its dividend as it expressed optimism about property development opportunities in London.
The value of the office and retail property giant’s portfolio, which includes Bluewater and One New Change shopping centres, fell by £945mln to £11.8bn in the six months to September 30, 2020, with the EPRA net asset value per share sliding 9.5% to 1,079p.
A valuation decline of 8% on a like-for-like basis was driven by a 5.7% decline in rental values, with regional shopping centres falling 20.4%.
London offices remained robust, with 99% of rents collected, but retail and leisure assets have seen double-digit falls in both rents and values as the government’s moratorium on rent collection “severely impacted” its ability to squeeze cash out of tenants and led to bad debt provisions of £110mln and was behind a decline in revenue profit to £115mln from £225mln a year ago.
But, having suspended dividend payments in April in order to conserve cash after the UK brought in its first coronavirus lockdown, the company said trading conditions, particularly in terms of rent collection and outlook, have begun to improve.
As a result, the FTSE 100 group said it will resume quarterly dividends with a payment of 12p per share on January 4, 2021, representing an aggregated payment for the first two quarters of the year.
LandSec had cash and available facilities of £1.2bn at the end of September, 2020, with net debt flat over the half-year at £3.9bn.
Following on from the unveiling of his London-focused strategy last month, new chief executive Mark Allan said in the half-year report that “Landsec remains in a fundamentally strong position” with the investment market for London office assets remaining "robust" throughout the pandemic and "little sign of that interest waning".
He suggested acquisition and development opportunities are likely to arise as a result of increased obsolescence of older office stock, as well as the long-term need for urban regeneration.
Shares in the company rose 4% to 666.3p on Tuesday morning.
Broker Peel Hunt said: "The return of dividends is welcome and perhaps signals the REITs confidence that the worst is over."
Assuming the declared 12p dividend repeated in the second half for an annual distribution of 24p, the analysts said this would be 20% ahead of their previous estimate.
--Adds shares and broker comment--