Land Securities Reports Earnings Dip, Boosts Future Guidance

Land Securities Group PLC (LON: LAND) reported results for the half-year ended September 30, 2025, revealing a decrease in profit before tax but an increased outlook for future earnings per share (EPS).

The company's proactive portfolio repositioning and focus on sustainable EPS growth appear to be driving positive momentum, despite broader economic headwinds.

The real estate giant's EPRA EPS rose 3.2% to 25.8p, fueled by a robust 5.2% like-for-like (LFL) income growth and a 6% reduction in overhead costs. However, IFRS profit before tax declined to £98 million, compared to £243 million in the prior period, impacted by losses on asset sales.

The company strategically recycled £644 million of assets, generating limited returns. EPRA NTA per share saw a slight decrease of 1.3%.

Landsec is prioritizing shareholder returns through dividends. The interim dividend saw a 2.2% increase, amounting to 19.0p per share, up from 18.6p. Active capital recycling is expected to further strengthen the capital base to enhance returns.

Key Growth Drivers:

• Strong LFL Income: Driven by high demand for best-in-class offices and retail spaces.
• Overhead Cost Reduction: Achieving significant savings, boosting overall profitability.
• Strategic Asset Recycling: Disposing of low-yielding assets and reinvesting in high-growth opportunities.

CEO Mark Allan commented, “We continue to see clear positive momentum across every part of our business, notwithstanding the wider economic environment.

“This gives us the confidence to raise both our near-term EPS guidance and medium-term EPS growth potential.”

Landsec has raised its guidance for FY26 like-for-like net rental income growth to approximately 4-5%, up from the initial 3-4%. The company now expects FY26 EPRA EPS growth to be at the top end of the 2-4% guidance range. Overhead costs are projected to reduce to the low £60 million range by FY27, surpassing the previous target of below £65 million. The potential for FY30 EPRA EPS has been raised from approximately 60 pence to approximately 62 pence.

The company's operational performance remains strong, with LFL net rental income growing by 5.2%. EPRA occupancy increased by 40 basis points to 97.7%, the highest level in nearly a decade. The office segment saw LFL income grow by 6.8%, while the retail-led segment saw growth of 5.0%.

Landsec is actively managing its capital structure, targeting a net debt/EBITDA ratio below 7x within the next two years, down from the previous target of below 8x. The Group LTV ratio stands at 40.3%, with a pro-forma LTV of 38.9% after accounting for post-period-end disposal activity.

The company is prioritizing new investment in retail over the next 12-18 months, given attractive income and growth prospects. Meaningful capital commitment to new development is not expected in the near term.