Landsec to invest £1bn in its retail estate amid strong FY25
The group stated that its portfolio value increased as investment markets began to stabilise, supporting its planned release of £2bn of capital employed from FY27 onwards
Property group Landsec has announced plans to increase its investment in its retail estate by £1bn amid strong FY25 performance.
The company’s retail portfolio delivered 5.1% LFL net rental income growth for the year ended 31 March 2025, with occupancy up 110bps to 96.6%, £39m of lettings signed or in solicitors’ hands 11% above ERV, and relettings/renewals 8% above previous rent.
It also drove 4.0% ERV growth, capitalising on continued focus from brands on fewer, bigger, better stores, with similar growth expected for the current year.
The group’s retail portfolio valuation was also up 3.4%, reflecting attraction of high-quality, growing income
Landsec invested £610m in Liverpool One and Bluewater acquisitions at an average 7.7% income return.
Overall, the group delivered 5.0% LFL net rental income growth, ahead of guidance, with 8% rental uplifts on relettings / renewals in London and major retail, and continued strong leasing momentum since the year-end.
Meanwhile, profit before tax was up to £393m, as strong 4.2% ERV growth supported £119m or 1.1% uplift in portfolio value.
The group stated that its portfolio value increased as investment markets began to stabilise, supporting its planned release of £2bn of capital employed from FY27 onwards.
Additionally, it reduced overhead costs by 5%, with more than 10% further savings expected over FY26-27.
Looking ahead, over the medium to longer term, Landsec warned of macro trends that it expects to shape the environment it operates in. The group stated that due to growing geopolitical risk and climate change inflationary pressures will likely persist, which stresses the importance of driving sustainable like-for-like income growth.
It also anticipates that the normalisation of interest rates will result in elevated cost of capital, putting more emphasis on risk-adjusted returns, the time value of money, and efficiency. Lastly, the company stated that technological change will continue to evolve customer expectations, impacting depreciation in sectors with fewer long-term supply constraints.
Mark Allan, chief executive of Landsec, said: “Our portfolio again delivered very strong performance with like-for-like net rental income growth of 5.0%, supporting growth in both earnings and portfolio valuation over the year. Owning the right real estate has never been more important and, with a very healthy pipeline of occupier demand, this trend looks set to continue, providing a clear trajectory for further near and medium-term EPS growth.
“Our undoubted portfolio quality is a result of proactive and successful capital recycling over recent years and this will continue to be a focus for us. Our capital allocation decisions from here are about ensuring that the growth outlook for our portfolio in 3-5 years’ time is as positive as it is for our current portfolio today.”
He added: “That is why we have set out a clear plan to increase investment in major retail by a further £1bn and establish a £2bn+ residential platform by 2030, to be funded by rotating £3bn of capital out of offices, non-core investments and low or non-yielding pre-development assets. Delivering on this strategy, whilst continuing to drive sustainable income and EPS growth, is our priority and we are firmly underway.”
