Landsec blames retail woes as it swings to half-year loss

Landsec blames retail woes as it swings to half-year loss
Landsec warned that conditions in the retail sector remain tough.
// Retail woes sees Landsec plunge to a half-year loss of £147m, compared to £42m profit last year
// CVAs and administrations led to 2.8% drop in Landsec’s property value
// Like-for-likes also decreased 1.5%

Retail property giant Landsec has swung to a half-year loss after taking a £368 million hit on the value of its properties due to woes in the retail sector.

The firm – whose portfolio includes Trinity Leeds in West Yorkshire and Westgate in Oxford – blamed the spate of high-profile retail failures and rescue deals for a 2.8 per cent fall in the value of its properties to £13.4 billion in the six months to September 30.

This saw it slump to an interim pre-tax loss of £147 million, against profits of £42 million a year earlier.

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It comes after major retailers such as department store chain Debenhams collapsed into administration just before its lenders seized control, while high street stalwarts such as Sir Philip Green’s Arcadia Group retail empire have secure CVAs to slash rents and shut shops.

Landsec’s half-year figures revealed like-for-like retail rents fell £2 million or 1.5 per cent to £136 million.

The company – formerly known as Land Securities – warned that conditions in the sector remain tough and said the snap General Election next month plus the Brexit delay to January 31 will add to the pressure.

Landsec chief executive Robert Noel, who recently revealed plans to retire next year, said: “We expect the retail market to remain challenging as it continues to be impacted by structural change, CVAs and administrations.”

He added: “With a General Election next month and the UK’s proposed exit from the EU further delayed, there will be continued uncertainty in the near term.

“However, we go into the second half of the year with confidence.”

The results show that retail parks took the biggest knock to their valuations – down 11.1m per cent – with a 9.4 per cent drop for regional sites and a 4.3 per cent decline across London retail.

But office valuations edged 0.3 per cent higher, while outlets increased 0.6 per cent.

Landsec is boosting its exposure to the London office sector to offset the retail troubles, with four sites in construction across the capital totalling one million square feet under a £3 billion development programme.

The figures follow July’s announcement that Noel plans to step down in 2020, when he will have served eight years in the job.

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