Landsec has reported a pretax loss of £193m as its net asset value dipped.
The FTSE 100 REIT made EPRA earnings for the six months to the end of September of £198m, up from the prior period of £197m. However, a £375m fall in the value of its £10bn portfolio translated that into a £193m loss.
Net asset value per share has also fallen, from 945p to 899p, while its total return on equity was -2.4%.
Chief executive Mark Allan said he expected values to improve next year and highlighted positive leasing activity during the period.
The REIT posted 2.8% growth in like-for-like net rental income, offsetting the impact from disposals made during the previous year.
“Since early 2022, we have been clear that we expected interest rates to remain higher for longer and that asset values would have to adjust to this new reality, which they have,” he said.
He pointed out that Landsec had taken “decisive” action, by selling £1.4bn of single-let offices, 86% of which were in the City, at prices ahead of today’s values.
In London, 76% of its portfolio is now located in the West End and Southwark, up from 58% in 2020, while City exposure is down to 24%.
Allan added that further sales were on the cards. “Investment activity remains thin, but we expect this to pick up in 2024, which should start to support values for the best assets.
“We will continue to recycle capital where our ability to add further value is limited, but having been a net seller when prices were higher, we are well-placed to take advantage of opportunities that will no doubt arise as the new higher-for-longer reality is now more widely accepted.”
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