Landsec has reported its fastest rent growth in nearly two decades, citing strong demand for its retail and office destinations.

The property company said like-for-like net rental income rose 4.6 per cent in the year, comfortably ahead of its initial guidance of three per cent to four per cent.

EPRA occupancy climbed 80 basis points on a like-for-like basis to 98 per cent, its highest level in two decades, while estimated rental value growth accelerated to 6.4 per cent.

Landsec chief executive Mark Allan said the business had been actively repositioned for a higher inflation and higher interest rate environment.

“Over the past few years we have actively positioned Landsec for a higher inflation and higher interest rate world,” he said.

“We have focused our portfolio on the best quality locations where customer demand is highest, scaled back development, reduced our overhead costs and maintained our strong capital base.

“Occupancy is now up to a 20-year high and rents are growing at their fastest pace in nearly two decades.”

The group’s retail-led portfolio delivered like-for-like net rental income growth of 5.5 per cent, with occupancy up 100 basis points to 97.7 per cent, also its highest level in 20 years.

Retail lettings signed or in solicitors’ hands totalled £49m, 11 per cent above estimated rental value, while rental uplifts on relettings and renewals more than doubled to 15 per cent.

Landsec said retail sales across its destinations rose 6.3 per cent, significantly ahead of the UK average of 1.1 per cent, as its top locations continued to outperform.

Retail estimated rental values increased 5.8 per cent, marking the strongest growth in two decades, while values rose 4.6 per cent, driven by the strength of rental growth.

The group said it is targeting 4.5 per cent to 7 per cent compound annual income growth from its existing retail portfolio by 2030, supported by reversion, turnover income, commercialisation and smaller capex projects.

Landsec said it was also selectively progressing higher-return retail investment projects, with further acquisition opportunities expected to come to market.

Group revenue momentum was supported by stronger office performance, where like-for-like net rental income rose six per cent and occupancy hit a decade-high of 98.6 per cent.

EPRA earnings increased to £382m, up from £374m, while EPRA earnings per share rose 2.2 per cent to 51.4p.

Profit before tax fell to £346m from £393m, while net debt reduced to £4.23bn from £4.34bn.

The company sold £705m of lower-returning assets during the year, including £346m of offices, as it moved to strengthen its capital base and sharpen the focus of its portfolio.

Landsec said it expects like-for-like net rent to grow by around 3 per cent to 5 per cent in the 2027 financial year, with “no signs of slowdown” in customer demand.

It also said it expects EPRA earnings per share to remain stable in 2027 before returning to high single-digit percentage growth in 2028.

Allan said the business remained confident in its medium-term growth potential despite wider uncertainty.

“As a result of our actions, our strong top line growth will increasingly flow through to an acceleration in EPS growth in the near and medium term,” he said.

“Despite elevated geopolitical risks, we remain confident in the potential to deliver around 5 per cent CAGR in EPRA EPS between now and 2030.”

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