Land Securities Share Discussion Threads

[jonwig] 13/11/2018 09:24

yopf - for the two Leeds retail assets, conversion would be pretty well impossible. Trinity is embedded into the city centre, and White Rose would have to be demolished.

On the other hand, there are Leeds assets such as the Merrion Centre (owned by TOWN) which are mixed-use: retail, office and hotel.

[yopf] 13/11/2018 08:56

There is more than a hint that that there's pain to come for investors.

Assuming Landsec get planning approval to convert commercial to retail, there will be quite a lag as it won't be a straightforward process.

[jonwig] 13/11/2018 08:14

FT's 'Opening Quote' email:

Landsec half-year results

“All eyes on retail valuation” - that is all commercial property investors are focusing on these days, reckon the analysts at Peel Hunt. So this morning, everyone will be looking closely at Landsec to see how the retail assets are faring. Shopping centres and retail warehouses account for 35 per cent of its portfolio by value and Landsec has the second largest exposure to UK shopping centres among the listed propcos, behind Intu. It owns shopping centres including Westgate Oxford, a joint venture with the Crown Estate, and a stake in the Bluewater centre in Kent.

And valuations were down again. Landsec reported a fall of £188m, or 1.4 per cent, in the valuation of its portfolio to £14bn. This decline was driven by the ever-struggling retail sector, with the value of Landsec’s retail parks dropping 4.5 per cent, and its shopping centres and shops down 2.9 per cent.

However, the group was still able to increase its profits in the first half of the year despite the drop in the value of these holdings. Landsec reported a pre-tax profit of £42m in the six months to the end of September, up from £34m a year earlier — a rise driven by higher net rental income and lower costs.

Key numbers:

Portfolio valuation down 1.4 per cent, to £14bn

As the City expected? Peel Hunt had downgraded its forecast for Landsec’s net asset value in October to a 3.4 per cent fall over the full year, to reflect the weak retail outlook.

What was said: Chief executive Robert Noel said: “Landsec has delivered a robust performance in an uncertain market. With healthy growth in earnings per share and a strong financial position, we are looking forward with confidence, introducing new concepts and growing our pipeline of development opportunities.”;

OQ verdict: Landsec’s performance looks quite resilient in the circumstances. That said, there is some doubt whether retail property valuations these days are capturing the full extent of the downturn in the sector. Last week, Barclays analysts cut income and net asset value estimates across the industry in advance of earnings season to reflect a more pessimistic view on retail, which it said was still under-appreciated in the market. “Transaction markets have dried up, tenant failures have increased and valuation declines are evident. The various structural issues — online sales, tenant failures, shortening average lease lengths — support our thesis for a prolonged period of reducing rents, yield expansion and retail asset valuation declines”. Still, Landsec’s shares - on a 36 per cent discount to NAV and a 5.6 per cent dividend yield - arguably more than reflect this.

[skyship] 13/11/2018 07:55

Agreed, quite positive really with only the Retail Parks (-4.5%) given a serious haircut.

[mushypeas] 13/11/2018 07:53

On first glance, no where near this bad. Main damage reported is to regional retail parks, an area in which Land Sec is reducing their current 5% exposure.

[eeza] 11/11/2018 20:26

British Land and Land Securities are due to report half-year results this week, with investors expecting Britain's biggest landlords to slash the valuation of their retail assets. Analysts at Numis expect both companies to devalue their retail portfolios outside London by more than 6%. - Sunday Times

[ball deap] 08/11/2018 23:45

I agree, at least all the drug addicts can be in one place too which is nice, have a wash and start the day fresh. Dignity is important for any homeless person.

[ntv] 29/10/2018 09:32

I see an article about adding /converting retail space in centres to renting for residential space
What a surprise there, It didn't take genius to work it out
Should have prepared plans years ago as they watched the destruction of high street

[ball deap] 23/10/2018 22:36

News is that London’s biggest mosque everyone talking about buying LAND.

If highly smart mosque gores are buying then you better follow the smart money. This mosque has a politician high up, might even be sadiq Khan lol telling them before all the sheep get involved. Helping out the boys that count so to speak.


Now, do not sell your stock, hold or buy the stock. Follow the smart money:-)

[essentialinvestor] 14/10/2018 12:40

There will be value here at some point that's for sure.
At what price is more difficult to say.
This is well worth monitoring as we approach the Brexit crunch point.

I mentioned a few months ago it was near the darkest moment in
the Brexit process that sector opportunity would present itself, it looks
to be playing out that way.

One proviso to the above, if we are facing another GE with a Labour government,
all bets are off. That is only a distant outlier atm.

[skyship] 14/10/2018 11:34

Re my comments above, here is a short extract taken from Gavin Lumsden’s Dec’17 interview with Richard Shepherd-Cross of Custodian REIT – which even now still trades at a 5%+ PREMIUM!

Well worth a 10minute listen:



====================================================
GL: I’m interested in your perspective as an investor outside London, in the regions. What’s it been like? It’s very easy to have a London-centric view whether you’re in property or anything else.

RSC: I think that’s right and particularly for property where all the market data is heavily skewed by central London property stats. But in the regional markets I would say from an occupational perspective, this is not a capital markets comment, this is a comment on the underlying occupier market, we’re mid cycle: mid-cycle because at the bottom of the market you have vacancy rates, weak tenant demand, you have falling rents. We’ve now got growing rents, rents have now been growing in the regions for about two years. We’ve seen very low vacancy rate but what we don’t yet have is wholescale speculative development. So we’ve still got a market that’s being driven by lack of supply and that’s keeping pressure on rents to grow.

GL: So that’s good for property prices? Because I imagine theres a lot of interest in regional property markets, getting away from London which seems very exposed to Brexit. So if there isn’t new supply coming through does that mean it’s good for prices?

RSC: What it means is rents should continue to grow. What we have to be careful of in a market where rents are growing is that we don’t buy out next year’s performance by paying too much for property today. That’s an easy trap to fall into.
=====================================================

[skyship] 14/10/2018 08:53

One has to concede that Elliott really have played a blinder with their big BLND/LAND shorts. Did anyone else really see this further leg down, falling 12% since 1st August?

Now one can understand the logic - with interest rates rising, the yields had fallen too low for the prime real estate in London and the South-East.

Buying smaller lots in the regions is a totally different matter, as there the tightening market suggests rents are secure and rising, yields are still too high, so valuations still too conservative at way below replacement costs - c35% below in the case of RGL!

But in London & the South-East there is no property shortage; more development stock is still coming through and many companies are still looking to exit an area where their employees cannot afford to live.

Reckon I'll continue to avoid the false value on offer here; and cling tight to my regional players. Bought back a few HCFT I top-sliced earlier. As far as I'm aware they are the only UK propco with ZERO voids. On the 30th June stats the discount = 22.5% and the yield = 5%, though Interim divi raised 17%, so possibly c5.7% prospective. A very conservatively managed minnow:

[essentialinvestor] 12/10/2018 18:04

Just to clarify, it was the Jefferies note I referenced
when mentioning potential disposals.

There was a brief summary in the FT and Property Week article,
but what we don't see is the modelling behind the analyst view.

From what I could gather, his rational may be - falling London office rents
coupled with rising voids in retail may necessitate disposals.

Very surprised on reading this (re potential disposals needed). Does not necessarily mean his view will be validated.

[void concept] 12/10/2018 17:03

Close today 820.4p. This is now below the target price forecast of 825p from the most bearish analyst of the sector Mike Prew of Jefferies.

[hugepants] 11/10/2018 20:03

This is what they signed off with in May with the final results.

"The business is in a strong position. Our portfolio is well let and adaptable to changing customer expectations. In a market facing short-term uncertainty, we have conservative gearing, market-leading debt facilities and a growing pipeline of opportunities for the future."

[steve3sandal] 11/10/2018 18:41

I can’t see reference to LTV covenants in the Accounts/Risks Statements’s. Plenty of other risks but if the dust settles here it’s high up on my top up list.

[essentialinvestor] 11/10/2018 16:00

HP, would expect there would need to be a pretty cataclysmic fall in NAV
for any debt covenants to be tested?.

[hugepants] 11/10/2018 14:26

yes LTV of 25%

[1nf3rn0] 11/10/2018 13:30

LTV less than 30% so should be able to refinance versus selling. However selling property at nearer NAV when the company is trading at 40% discount will provide a boost. If proceeds can then be reinvested to generate higher returns than the divested asset was yielding then it makes even more sense.

[1nf3rn0] 11/10/2018 13:27

Their LTV is

[essentialinvestor] 11/10/2018 10:13

Will they need asset sales, as the recent analyst view appears to suggest.

[essentialinvestor] 11/10/2018 10:10

Value is harder to find when there is a cheery consensus.

[hybrasil] 11/10/2018 10:03

I am very tempted but I think I will let all this turbulence finish.
I watched in 2009 but didn’t buy then