12th Nov 2013 08:49
LONDON (Alliance News) - Commercial property company Land Securities PLC Tuesday reported an increase in profit and revenue for the first half, but warned revenue in the second half would be lower due to a highly competitive market.
The company, which is developing 20 Fenchurch Street, dubbed the "Walkie Talkie" building, reported pretax profit of GBP397.9 million for the six months ended September 30, up from GBP131.4 million a year ago, as its portfolio was valued much higher than in 2012.
This year Land Securities made a GBP166 million net surplus on revaluation of investment properties compared with a GBP4.2 million deficit a year ago.
Revenue also rose 8.9% to GBP347.8 million from GBP303.6 million in 2012 as the company's portfolio value increased to GBP11.76 billion from GBP11.45 billion at the end of March.
Gross rental income increased to GBP312.8 million during the period, from GBP286.7 million in 2012 despite a dip in income from its London portfolio. The company's London assets posted gross rental income of GBP133.9 million, down slightly from GBP138.5 million a year ago.
At 20 Fenchurch Street, the company's landmark tower in the City of London, Land Securities said it has continued to attract new tenants and the building is now 56% pre-let, with a further 20% working through contract details.
The site has not been without its problems. Earlier this year the building reflected strong sunlight onto neighbouring buildings and the surrounding streets. In one case, Songbird Estates PLC, joint developers for the project, had to compensate a motorist whose car was melted by the glare from the building's windows.
However, Land Securities said the site was attractive to tenants.
"Despite the solar glare issue of the summer, occupiers have not been blinded to the efficiency and location of the building. We are close to resolving the issue and it will not delay occupation nor inflate budgeted cost," Chief Executive, Robert Noel, said in a statement.
In its retail portfolio, the recently completed Trinity Leeds is performing strongly as a destination for shoppers and retailers, reinforcing the business?s view that prime centres can still be created profitably in the right locations.
?At Trinity Leeds we are now 96% let or in solicitors' hands and on 17 October we opened Trinity Kitchen, our street food concept, which has seen very strong trade since opening,? the company said.
While there were no significant acquisitions in the period, Land Securities spent GBP93.7 million on development and refurbishment projects in London. It made disposals of GBP244.3 million, including its share of the Empress State Building, SW6, Oxford House, W1 and 38-48 Southwark Bridge Road, SE1.
Since September 30 the firm has sold Bankside 1, 2 and 3 in southeast London a large leasehold asset predominantly let to RBS, for GBP315.0 million, reflecting a net initial yield of 5.2%.
The company's basic net asset value per share increased 3.6% to 994 pence, from 959 pence at the end of March.
Looking ahead the company said it expected revenue in the second half to be lower than the first as income from sales dips.
"Due to the highly competitive market, it is likely that sales of assets will exceed capital expenditure and acquisitions in the second half," Nole said.
"While this will strengthen our balance sheet further, it is likely that revenue profit will be slightly lower than in the first half as we lose income from sales. With strong interest in our London developments, we expect to continue to deliver lettings ahead of our original expectations," he added.
The board declared a 2.7% increase in the interim dividend of 15.2 pence, from 14.8 pence a year ago.
Land Securities shares were trading at 984.88 pence Tuesday morning, up 4.88 pence or 0.5%, making it one of the biggest gainers on the FTSE100.
By Anthony Tshibangu; [email protected]; @AnthonyAllNews
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