Landsec Beats Property Valuation Estimates on Strong Office and Retail Demand

May 18: Landsec beat property valuation estimates on strong office and retail demand, with EPRA net tangible assets at 882 pence per share, slightly ahead of analysts' estimates of 880 pence.

Financial Performance

EPRA earnings per share came in at 51.4 pence, matching expectations. The performance was supported by a 4.6 per cent rise in net rental income during the financial year. Landsec also reported a 5.5 per cent increase in like-for-like net rental income. Occupancy across its portfolio rose by 100 basis points to 97.7 per cent, marking the company's highest occupancy level in around 20 years.

AI Driving Office Demand

The company said continued adoption of artificial intelligence is expected to drive demand for premium office space in central London. At its recently opened Myo King's Cross office site, nearly 80 per cent of leasing activity came from AI-related or AI-adjacent businesses, showing the growing impact of technology firms on office demand.

Shift Towards Retail Assets

Despite improving leasing activity, Landsec said it does not plan to commit significant capital towards new office developments over the next 18 months. The company has instead shifted focus towards retail assets, where rental value growth reached 5.8 per cent, the highest level seen in two decades.

Future Outlook

For fiscal year 2027, the company expects like-for-like net rental income growth of around 3 per cent to 5 per cent, while EPRA earnings per share are expected to remain broadly flat year-on-year due to the full-year impact of the sale of the Queen Anne's Mansions office asset. Looking further ahead, the company forecast high single-digit percentage earnings growth for fiscal year 2028.