Mark Allan, Chief Executive of Landsec, commented:
“We have continued to deliver on our strategic objectives over the past six months, strengthening our positioning for a higher inflation, higher rate environment. As a result, we have further improved our near-term EPS growth outlook, our medium-term income growth potential, and our strong capital base.

 
“In a more uncertain world, the characteristics of our earnings matter. We own scarce, prime real assets where customer demand is concentrating. Those assets are already generating strong rental growth, with significant further income growth embedded in our portfolio. Combined with our long-dated financing, efficient cost base, and substantially completed development capex, that gives us both resilience today and visibility on an acceleration in EPS growth ahead. Our progress over the past six months further reinforces our potential to deliver c. 5% CAGR in EPRA EPS to FY30.”

Financial highlights

• EPRA earnings(1)(2) stable at £192m (HY25: £192m), as 6.2% LFL income growth and 9% reduction in overhead costs offset £10m earnings impact from sale of QAM during second half of prior year
• EPRA EPS(1)(2) of 25.9 pence (HY25: 25.8 pence) despite -5.0% impact from sale of QAM, in line with guidance for the full year
• Interim dividend up 2.1% to 19.4 pence (HY25: 19.0 pence)
• IFRS profit before tax up to £243m (HY25: £98m) due to £88m valuation surplus (HY25: £(6)m), with basic IFRS EPS up to 33.0 pence (HY25: 13.0 pence)
• Raised £500m new equity post period-end to fund £611m acquisitions of Metrocentre and a further stake in Bluewater, increasing near-term EPS growth and medium-term income growth potential
• IFRS net debt of £4,361m (FY26: £4,234m), with ND/EBITDA(1)(2) down to 7.7x (FY26: 8.4x) and LTV(1)(2) down to 37.1% (FY26: 38.7%) pro-forma(3) for transactions and equity issue post half year
• EPRA NTA per share(1)(2) up to 893 pence (FY26: 882 pence), or 863 pence pro-forma for equity issue 

Guidance

• FY27 EPRA EPS expected to be stable vs FY26, in line with previous guidance
• FY28 EPRA EPS expected to see improved high-single-digit percentage growth, as recent retail acquisitions add to upside from development leasing and like-for-like income growth 
• Improved visibility on potential for FY30 EPRA EPS to grow to c. 62 pence, implying c. 5% CAGR in EPS over FY27-FY30, as c. 90% of this is now driven by current portfolio and platform (FY26: c. 80%)
• Expect net debt/EBITDA to reduce to comfortably below 7x as income grows and committed development exposure comes down to less than 2% of portfolio value 

Operational highlights

• Consistent concentration of customer demand on very best space, combined with high constraints on new supply, means rents across our scarce, high quality portfolio continue to grow
• LFL net rental income growth up to 6.2% (FY26: 4.6%) as rental uplifts on relettings/renewals rise to 16% (FY26: 15%), with LFL growth for full year now expected to be at upper end of c. 3-5% guidance
• 2.9% ERV growth over six months, creating additional room for future income growth
• Further increased operating efficiency, with a 1.2ppt improvement in gross-to-net rent margin and 9% reduction in overhead costs, reducing overhead to the lowest level in 20+ years
• Delivered £1.0bn of accretive acquisition/disposal activity YTD, enhancing income and income growth

Office-led LFL income up 5.4%, as portfolio reversion increases to 20%

• LFL net rental income growth ahead of expectation at 5.4%, with strong upside from rent reviews, £9m lettings signed or in solicitors’ hands 7% above ERV, and relettings/renewals 11% above previous rent
• EPRA occupancy of 97.7% down 90bps, mostly due to lease expiries at our sole asset in Paddington towards the end of the period, yet deals agreed since the period-end increase occupancy to 98.0%
• ERVs up 3.4% over six months, tracking ahead of guidance for the full year
• Reversionary potential up to 20%, equating to £50m future upside in rental income, underpinning slightly higher like-for-like income growth over next few years than previously envisaged
• Recently completed developments at Timber Square, Myo Kings Cross and Oval 88% let or under offer (May: 54%), with £13m of new rent signed/under offer driving continued growth in ERV

 

Retail-led LFL income up 6.3%, as rental uplifts rise to 17% and sales continue to outperform

• LFL net rental income growth accelerated to 6.3%, with £29m of lettings signed or in solicitors’ hands 12% above ERV, and rental uplifts on relettings/renewals increasing to a new high of 17%
• EPRA occupancy up 10bps to 97.8%, the highest level in over 20 years
• ERVs up 2.3% over six months, in line with guidance for the full year
• Retail sales up 3.7% vs -1.4% for UK national average, driving further growth in turnover income and taking sales growth across our portfolio since March 2022 to 26% vs just 2% for the UK market
• Footfall up 1.6% vs 0.1% national average, as our best-in-class assets continue to gain market share
• On track vs target to deliver c. 4.5-7% CAGR in income from existing portfolio by FY30 via capturing growing reversion, turnover income, commercialisation and small capex projects

1. An alternative performance measure. The Group uses a number of financial measures to assess and explain its performance, some of which are considered to be alternative performance measures as they are not defined under IFRS. For further details, see the Financial review and table 13 in the Business analysis section.

2. Including our proportionate share of subsidiaries and joint ventures, as explained in the Financial review. The condensed consolidated preliminary financial information is prepared under UK adopted international accounting standards (IFRSs and IFRICs) where the Group’s interests in joint ventures are shown collectively in the income statement and balance sheet, and all subsidiaries are consolidated at 100%. Internally, management reviews the Group’s results on a basis that adjusts for these forms of ownership to present a proportionate share. These metrics, including the Combined Portfolio, are examples of this approach, reflecting our economic interest in our properties regardless of our ownership structure. For further details, see table 13 in the Business analysis section.

3. Pro-forma figures throughout this announcement reflect the impacts of committed acquisitions (£611m), disposals (£259m), and net equity raise (£489m) since the period-end.