UK property group LandSec restores dividend even as losses soar

By Aakash B

(Reuters) - Shares in British property firm Land Securities Group Plc <LAND.L> rose 4% on Tuesday as it resumed dividend payouts and investors looked through big first-half losses towards signs that retail rents and shopping centre valuations may soon bottom out.

The company lost 835 million pounds ($1.1 billion) in the first half of its 2021 financial year, up from 147 million pounds a year earlier as pandemic-hit businesses held back rental payments and the value of its properties sank.

Retail property owners and tenants have been working together to ride out the coronavirus crisis but the pandemic has only added to problems, from Brexit to the long-running shift to online shopping, that have hammered values.

J.P.Morgan analysts, however, argued that an 18% drop in the value of the shopping centres Land owns across Britain, added to a 27% drop in the year to April, means prices may begin to bottom out.

LandSec itself predicted that retail rents, already down 14.4% this year, need to fall another 15% to become sustainable. It said that would mean rents have fallen 35-40% peak to trough.

J.P.Morgan said improved rent collection and lower bad debt provisioning, after the company set aside 87 million pounds in the first half, should spell a stronger second half.

"We see a constructive outlook for listed property markets into year-end," the brokerage said. "With US elections seemingly out of the way and a COVID-19 vaccination on the table, the remaining big macro risk of Brexit feels more manageable."

Land Securities said like-for-like net rental income during the period was down 10% and the impact on results from unpaid rent and service charges had been significant.

However, it said it would resume payments of quarterly dividends, which it had suspended in April due to uncertainty around the pandemic.

(Reporting by Aakash Jagadeesh Babu in Bengaluru; Editing by Ramakrishnan M., Patrick Graham, Kirsten Donovan)