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LONDON - Land Securities (LON:LAND) Group (OTC:LDSCY) PLC, a major European real estate firm, shared insights into its updated strategy and current trading status during a capital markets event today. The company, commonly known as Landsec, is building upon its strategic progress since late 2020, with a focus on income and earnings per share (EPS) growth to enhance return on equity.
Landsec has reshaped its portfolio through targeted investments and over £3 billion in disposals since its Strategy Review in October 2020, resulting in a collection of high-quality, diverse urban places. The company has seen strong customer demand, leading to increased occupancy and rental income.
The next phase of Landsec’s strategy aims to shift towards higher income and growth with lower cyclicality. This includes a rebalancing of its portfolio, with expanded investment in its retail platform and the establishment of a significant residential platform, funded in part by reducing capital allocated to office spaces.
Landsec’s primary objective is sustainable income and EPS growth. The company projects approximately 20% growth in EPS from the current 50 pence to a potential circa 60 pence by the fiscal year 2030. This growth is expected to drive dividends, which will now be issued semi-annually.
In the short term (1-3 years), EPS growth will come from utilizing the reversion potential in retail and office portfolios, reducing overhead costs, and releasing capital from pre-development assets. Over the next 2-5 years, a rotation of capital towards higher income growth assets will further enhance EPS growth.
Plans include releasing half of the £0.7 billion capital in pre-development assets, growing the £3 billion retail platform, and exiting £0.8 billion in retail/leisure park assets. In the longer term, Landsec aims to establish a £2 billion-plus residential platform and scale back new office-led development starts.
By 2030, Landsec envisions a balanced portfolio comprising retail-led, residential-led, and office-led urban places. The company anticipates that the diversification and evolution of urban spaces will blur the lines between traditional property uses.
Landsec’s financial health remains robust, with a solid capital base and a focus on maintaining strong ratios, such as net debt/EBITDA below 8x and loan-to-value (LTV) in the mid-30s. The shift from office to residential investment is expected to reduce volatility in returns.
Since its half-year results in November, Landsec has maintained strong operational performance with growing occupancy and lease signings. The company now anticipates fiscal year 2025 EPS to slightly exceed last year’s level, with further progress expected in fiscal year 2026 towards the fiscal year 2030 goal.
The company’s capital markets update is based on a press release statement and will be available on the Landsec website later today.
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