Landsec delivers upbeat outlook as FY profits meet forecasts

(Sharecast News) - Real estate investment trust Landsec met consensus forecasts with a small increase full-year profits, as the company reiterated confidence in its plans to reallocate capital away from offices in the coming years. For the year ended 31 March, EPRA earnings came in at £374m, only marginally higher than the £371m earned the year before, but more or less in line with the £373m market estimate.

Landsec said that like-for-like net rental income growth of 5.0% and lower overhead costs outweighed the impact from significant disposals early in year and a rise in finance costs.

Occupancy across the portfolio rose by 100 basis points on a LFL basis to 97.2% - its highest level in five years.

The value of the portfolio increased 9.2% over the period to £10.88bn. However, EPRA net tangible assets per share were 874p, up from 859p the year before but below the 890p estimate.

The dividend was lifted to 40.4p per share from 39.6p previously.

Landsec, whose portfolio is predominantly made up of Central London office assets and major retail destinations across the UK, announced in February that it plans to shift capital over the next two to five years from offices to residential "where the volatility in returns is lower".

Commenting on the portfolio rebalancing on Friday, chief executive Mark Allan said: "Our capital allocation decisions from here are about ensuring that the growth outlook for our portfolio in 3-5 years' time is as positive as it is for our current portfolio today.

"That is why we have set out a clear plan to increase investment in major retail by a further £1bn and establish a £2bn+ residential platform by 2030, to be funded by rotating £3bn of capital out of offices, non-core investments and low or non-yielding pre-development assets."

Shares were down 0.6% at 600p in early deals on Friday.