Landsec raises interim dividend to 19.4p and expects earnings growth to pick up in the year to March 2028

Rents across Landsec's shopping centres and London offices kept rising in the six months to 30 September, and the company is lifting its interim dividend by 2.1% to 19.4p a share. It will be paid on 8 January 2027 to shareholders on the register at the close of business on Friday 27 November, split between a 13.3p property income distribution and a 6.1p ordinary dividend.

EPRA earnings, the measure of recurring rental profit that property companies use, were unchanged at £192m, or 25.9p a share against 25.8p. Like-for-like rental income growth of 6.2% and a 9% cut in overheads made up for about £10m of income lost through a sale in the second half of the previous financial year. A £88m rise in property values took profit before tax to £243m, from £98m a year earlier.

Shops and shopping centres

Retail income grew fastest. Like-for-like rental income from Landsec's retail-led assets rose 6.3%, and where shops were relet or leases renewed, the new rent was on average 17% higher than before. Occupancy reached 97.8%, which the company said was its highest in more than 20 years. Sales at its centres rose 3.7% against a 1.4% fall for UK retail as a whole, and footfall was up 1.6%.

After the half year ended, Landsec raised £500m in new shares to help pay for £611m of acquisitions: Metrocentre and a larger stake in Bluewater. It put the average net rental yield on the two deals at 7.9%.

London offices

Office-led income rose 5.4% on a like-for-like basis. Estimated rental values, the rent the company thinks it could get if space were let today, rose 3.4% over the six months. Three recently completed office schemes, Timber Square, Myo Kings Cross and a smaller building in Oval, are now 88% let or under offer, up from 54% in May.

Office occupancy slipped to 97.7%, mostly because leases ended at its one building in Paddington, but lettings agreed since September have taken it to 98.0%.

Developments and disposals

Landsec has £133m of development spending left on committed schemes and plans no significant new projects in the near term. It has sold, or exchanged contracts to sell, £338m of property that produced little or no income growth, and has decided not to go ahead with a residential development in Lewisham. It secured a revised planning consent at Finchley Road and is working with public sector partners to improve the viability of its Mayfield scheme.

Pro forma for the deals and share issue, the loan-to-value ratio falls to 37.1%. Net tangible assets per share rose to 893p, or 863p after the new shares.

The company expects earnings per share for the year to March 2027 to be flat on last year, followed by growth in the high single digits in the year to March 2028 as the shopping centre purchases start to contribute. It now sees a clearer path to about 62p of EPRA earnings per share by its 2030 financial year.