Land Securities will not rule out a sale of its stake in the Walkie Talkie, EC3, if the right offer is made, according to chief executive Robert Noel.
Speaking after the release of the company’s annual results to the end of May, he said: “We don’t intend to sell the Walkie Talkie. However, as we always say, no asset is sacrosanct, and we will always accept a strong bid for any asset when we think we can use the money better elsewhere, no matter what the asset is.”
CBRE and Eastdil Secured were instructed in March to sell Canary Wharf Group’s 50% stake in the Walkie Talkie, 20 Fenchurch Street, for around £600m.
Although LandSec is not actively seeking a sale, the recent sale of the Cheesegrater, 122 Leadenhall Street, EC3, could give pause for thought. At first only British Land’s half of the asset was up for sale, but Oxford Properties also sold its half after receiving a strong offer from CC Land.
Land Sec continued to be a net seller for the year, and Noel said 2017 would likely be a quiet year for the REIT in terms of spending.
| Mar-17 | Mar-16 | |
|---|---|---|
| Revenue profit(1) | £382m | £362m |
| Valuation (deficit)/surplus(1) | £(147)m | £907m |
| Profit before tax | £112m | £1,336m |
| Basic earnings per share | 14.3p | 169.4p |
| Combined Portfolio(1) | £14.4bn | £14.5bn |
| Adjusted net debt(1) | £3.3bn | £3.2bn |
| Group LTV ratio(1) | 22.2% | 22.0% |
“Our view is that development isn’t about when you start, it’s about when you deliver,” he said.
“We think the outlook for net effective rents is going to be weaker until we know where our position is with the EU and we know what our trading environment is going to be. I think that’s going to take some time to sort out.”
With the completion of the most of Victoria, SW1 – just 150,000 sq ft remains in Nova Phase II, after 2m sq ft has already been built – the REIT has a relatively small development pipeline.
Noel says LandSec has 1.4m sq ft across four schemes in London: alongside Victoria it has 500,000 sq ft at 21 Moorfields, 350,000 sq ft at Red Lion Court and 140,000 sq ft behind the Piccadilly lights.
| Portfolio values | ||||||
|---|---|---|---|---|---|---|
| Market value | value shift | Rental value change | Net initial yield | Equivalent yield | % change | |
| £m | % | % | % | % | bps | |
| Shopping centres and shops | 3,663 | -1.3 | 1.6 | 4.3 | 4.8 | 9 |
| Retail parks | 855 | -4.2 | 0.6 | 5.5 | 5.6 | 24 |
| Leisure and hotels | 1,361 | 2.3 | 0.2 | 5.2 | 5.4 | -6 |
| London offices | 4,153 | -4.4 | 2.5 | 4 | 4.7 | 18 |
| Central London shops | 1,267 | 6.9 | 4.7 | 2.5 | 4.1 | 7 |
| Other (Retail and London) | 61 | -6 | 3.4 | 1.9 | 3.6 | 2 |
| Total like-for-like portfolio | 11,360 | -1.4 | 1.9 | 4.2 | 4.8 | 11 |
| Proposed developments | 6 | -33.2 | n/a | – | n/a | n/a |
| Development programme | 1,138 | 1.3 | n/a | 0.1 | 4.2 | n/a |
| Completed developments | 1,841 | -0.4 | 1.9 | 2 | 4.2 | 10 |
| Acquisitions | 94 | 0.4 | n/a | 3.7 | 3.8 | n/a |
| Total Combined Portfolio | 14,439 | -1 | 1.9 | 3.6 | 4.7 | 9 |
“At the moment [In London] we believe it’s time to have our levers full back,” Noel said.
“In the next phase in London we will be acquiring development sites and short-let assets and we will build that program of 1.4m sq ft into a bigger program, but I cannot tell you when, because I don’t know myself.”
In terms of new areas, he would not rule out future residential development, though he said Land Sec would not be interested without changes to the current political and planning environment.
“There is a macro trend towards an expanding private rented sector,” he said.
“Land securities will probably not get involved in that until such time as there is cross-party political support for that sector as well as a proper planning environment. And if those two things were in place I would see no reason why we would not play a part in that market.”
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