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Landsec reveals ‘cautious optimism’ after swinging to profit

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Bluewater shopping centre owner Land Securities has revealed it swung to a half-year profit as the retail sector bounces back and workers return to offices following the lifting of pandemic restrictions.

The commercial landlord – also known as Landsec – posted a pre-tax profit of £275 million for the six months to September 30, against losses of £835 million a year earlier.

It said key retail rents were now reaching a stable point as the hard-hit sector recovers after a series of lockdowns, while office rents in prime London sites have proved “resilient”.

Landsec said it expects the rebound in office demand to continue for the rest of the year, with office use now at around 55% of pre-Covid levels, having increased “markedly” in the past couple of months.

The group said its outlook was one of “cautious optimism”.

It said: “As a result of the success of its vaccination programme, the UK appears reasonably well placed to navigate autumn and winter without needing to revert to lockdowns or other excessively restrictive measures.

“However, it is by no means certain that this will be the case.

“In addition, people’s behaviour patterns are still difficult to predict; it is challenging to discern short-term ‘pent-up’ demand-driven factors from long-term trends; and supply chain disruption is likely to remain an issue for a number of months, raising inflation concerns.”

Landsec’s figures showed that gross rental income fell 3.8% to £282 million in the first half, pushing revenues down to £315 million from £327 million a year ago.

But the value of the firm’s combined portfolio rose to £11 billion from £10.8 billion a year earlier.

It hiked its dividend to 15.5p from 12p a year ago, helping shares lift 3%.

The group said retail centres continue to benefit from a shift away from high streets, with brand partner sales now within around 3% of pre-pandemic levels.

Outlet portfolio like-for-like sales rose 7.9% in the half-year on a two-year basis.

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