20th Feb 2007 07:02
Land Securities Group Plc20 February 2007 Tuesday 20 February 2007 Land Securities Group PLC ("Land Securities"/ "Group") LAND SECURITIES REPORTS RESULTS OF VALUATION FOR REIT CONVERSION PURPOSES Land Securities today reports the results of the valuation of its REITqualifying property assets. This has been carried out in order to assess theGroup's conversion charge as a result of its election to REIT status on 1January 2007. The valuation was undertaken as at 31 December 2006 and relatesto the Group's investment portfolio and also to the relevant assets of itsproperty outsourcing business, Land Securities Trillium. Based on therevaluation, Land Securities estimates that its conversion charge will beapproximately £315m, which it will pay in full in July 2007. This chargerepresents 2% of the 31 December 2006 value of the REIT qualifying assets. Valuation results The investment portfolio assets were revalued at £14.8bn to show a 1.6% surplussince the interim results for the six months ended 30 September 2006, and an8.7% surplus since the last financial year end date of 31 March 2006. The qualifying property assets of its outsourcing business, Land SecuritiesTrillium ("LST"), were valued at £931.9m. These properties are generally notclassified as investment properties for accounting purposes and so are held inthe Group's balance sheet at book value (cost less depreciation). The valuationsurplus of these assets over their book value of £564.5m at 31 December 2006amounted to £367.4m or 78 pence per share. The valuation of LST's qualifying assets does not represent a whole businessvaluation. For example, liabilities on short leasehold properties cannot beascribed a negative value for the purposes of assessing the REIT conversioncharge. This is particularly relevant to LST's largest contract, where theDepartment for Work and Pensions is entitled to vacate 7.75 million sq ft ofaccommodation over the life of the contract and where 65% of the contractaccommodation is short leasehold. Effect on net asset value per share If the Group's last reported net asset value as at 30 September 2006 is adjustedto reflect the increase in value of the investment portfolio assets between 30September and 31 December 2006, the Group's adjusted diluted net asset valueincreased by 2.2% from 2121 pence per share as at 30 September 2006 to 2168pence per share as at 31 December 2006. On the same basis, but after adjustingfor the REIT conversion charge (equivalent to 67 pence per share), the Group'sadjusted diluted net asset value as at 31 December 2006 stood at 2101 pence pershare. These net asset figures do not include the revaluation of LST'squalifying property assets which continue to be held in the balance sheet atbook value. These figures also exclude other movements in shareholders' equityduring the period including any profit or loss. Francis Salway, Group Chief Executive, commented: "We are delighted to havesuccessfully converted to REIT status, a change which triggers a revaluation ofour qualifying property assets outside our normal reporting timetable. As wepredicted, growth has slowed across the traditional property investment markets,supporting our decision to focus on expanding our property outsourcing business. "We have had notable success in securing new property outsourcing business inthe past three months, including the acquisition of Secondary MarketInfrastructure Fund, the Accor hotels transaction and our appointment aspreferred bidder on the Defence Training Rationalisation programme. As a resultwe will be deploying in excess of £2bn of capital to this area of the business.The one-off valuation of LST's property assets provides an indication toshareholders of the value inherent in this business and, taken together with ournew business success, we believe that we have provided clear differentiation interms of our ability to generate future value for shareholders." Highlights • Combined investment portfolio including share of joint ventures valued at £14.8bn • Investment portfolio valuation surplus of 1.6% • Strong contribution from development with a 2.9% uplift in value • Pro-forma adjusted diluted net assets* per share up 2.2% to 2168p; after REIT conversion charge at 2101p • Land Securities Trillium qualifying properties valued at £931.9m - representing a 78p per share increase above book value at 31 December 2006 • Land Securities Trillium entering a new phase of growth with £0.9bn invested in acquisitions with the potential to invest a further £1.4bn into contracts where it has reached preferred bidder status. *Based on investment portfolio valuation growth added to 30 September 2006 netassets. -Ends- For further information, please contact: Francis Salway/Emma Denne Stephanie HighettLand Securities Group PLC Financial DynamicsT +44 (0)20 7413 9000 /(0)20 7024 5460 T +44 (0)20 7831 3113 The company will be holding a conference call for investors and analysts at 11:00am today, Tuesday 20 February 2007. Please note the new details of the call are as follows: Dial in numbers: 0845 245 3471 (UK) or +44 (0)1452 542 300Conference ID: 9718352Participants' password: Land Securities Notes to editors: Land Securities is the UK's leading real estate investment trust. Our nationalportfolio of commercial property, worth many billions of pounds, includes someof Britain's best-known shopping centres, such as the Birmingham Bullring andGunwharf Quays in Portsmouth, as well as London landmarks such as the PiccadillyLights and Westminster City Hall. We are leading urban renaissance through ourbillion pound development programme, transforming Exeter, Bristol and Cardiffcity centres as well as key sites in Central London. We are also one of theleading names in property outsourcing and through urban community developmentare involved in long-term, large-scale regeneration projects in the south-east. Appendices Investment property business - valuation results Open Three month Open Open market Valuation Market Market value Surplus(1) value value 31/12/06 31/12/06 30/09/06 31/03/06 £m % £m £mRetailShopping centres and shops 4,472.9 0.2 4,474.4 4,174.0Retail warehouses 2,440.4 0.2 2,421.5 2,314.6London retail 1,207.5 2.1 1,173.2 1,101.6London officesWest end 2,826.3 3.7 2,966.0 2,416.4City 1,181.9 2.1 1,154.4 1,059.7Mid-town 1,197.2 2.4 848.2 654.8Inner London 822.2 1.6 782.2 675.6Other 645.0 3.1 619.9 496.2 Combined investment portfolio 14,793.4 1.6 14,439.8 12,892.9 Notes (1) The valuation surplus is stated after adjusting for the effect of spreading of rents and rent free periods over the duration of leases in accordance with IFRS but before restating for finance leases. On the combined investment portfolio the valuation surplus was 1.6%, with thestrongest performance from London offices with a surplus of 2.8%. In addition, our ongoing extensive development programme, currently valued at£1.9bn, has continued to be a significant differentiator in terms ofperformance, with a valuation surplus of 2.9% for the three months. Over the last nine months, the valuation surplus from our combined investmentportfolio, including acquisitions and developments, was £1,169.8m or 8.7%. Land Securities Trillium - valuation results (1) 1. Norwich Union Contract £m Purchase cost 44.5 Book value as at 31 December 2006 43.3 Appraised value as at 31 December 2006 51.7 2. Barclays Bank Contract Purchase cost 25.2 Open market value as at 30 September 2006 (2) 27.4 Appraised value as at 31 December 2006 (2) 27.4 3. Department for Work and Pensions Contract Fair value on acquisition of Trillium/purchase cost (3) 404.1 Other acquisitions 52.9 Capital expenditure 152.1 Depreciation (61.9) Disposals (53.4) Book value as at 31 December 2006 493.8 Appraised value as at 31 December 2006: (4) (5) DWP occupied 797.7 Let to third parties 6.2 Vacant 48.9 852.8 Notes: (1) The revaluation of Land Securities Trillium's assets excludes finance leases with a book value of £86.7m as at 31 December 2006 (2) Classified as an investment property (3) Properties outsourced under the original PRIME contract are stated in this line at the fair value ascribed to them at the date of Land Securities' acquisition of Trillium in November 2000, whereas properties acquired subsequently and properties outsourced under the TIES contract extension in December 2003 are stated in this line at purchase cost. (4) The appraised values as at 31 December 2006 are stated after deduction of estimated gain share payments due to the DWP upon vacation of properties by them. (5) The vacant possession values of DWP properties as at 31 December 2006 were: DWP occupied £524.8m Vacant £48.9m This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Land Securities