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Landsec posts first annual profit since 2017 on record London office leasing

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By Muhammed Husain

(Reuters) -Land Securities reported its first annual profit in five years on Tuesday, driven by record leasing in its London offices and a return to growth in major retail destinations.

Britain's top commercial property landlord said office leases in Central London, which comprises about 65% of the group's overall portfolio, stood at 63 million pounds ($78.5 million) for the year amid higher demand for spacious properties spurred by the return of workers to offices and a rebound in tourism.

Shares of the group, which last reported an annual profit in 2017, rose as much as 2.3% at 759 pence by 1015 GMT.

Landsec also expressed confidence that retailers, who had shifted significantly to online trade during the pandemic, will return to physical stores.

"We're seeing retailers take action to address the fact that the cost of doing business online has become extremely expensive," Chief Executive Officer Mark Allan said on a media call.

"The costs of acquiring a customer in the digital world is 60% higher than it was five years ago, rents are 35% lower," he added.

Landsec plans to triple its share of mixed-used spaces by 2027 as part of a strategy launched in 2020. Its deals with MediaCity, the UK's biggest tech and media hub outside London, and regeneration firm U+I were to aid that growth.

Currently, mixed-use spaces account for about 8% of Landsec's business.

J.P. Morgan analysts said Landsec may "struggle to strike a chord with investors during the current macro environment" over their strategy, but it was one that would help with future volatility.

Landsec's profit before tax for the year ended March 31 was 875 million pounds, compared with a pretax loss of 1.39 billion pounds a year earlier.

($1 = 0.8082 pounds)

(Reporting by Muhammed Husain in Bengaluru; editing by Uttaresh.V and Krishna Chandra Eluri)

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