Land Securities share price: Group points to Brexit risks

Written by: Alice Young
October 21, 2019

Land Securities (LON:LAND) has updated investors on its full-year performance. The company has followed peer British Land (LON:BLND) in warning about the impact of a potential Brexit.

**Highlights from the company statement:**
Profit before tax for the year was £1,335.6m, down £1,080.9m on last year due to a reduction in the valuation surplus. In addition to our revenue profit, the net change in values of our investment properties, any profits or losses on the disposal of assets and any exceptional items are key components of our profit before tax.
Since 2010, we have built and let 1.4m sq ft of space in our Retail Portfolio. At the same time we committed to 3.1m sq ft of speculative commercial development in our London Portfolio – a huge leasing challenge. After another strong year of lettings, we now have just 0.5m sq ft left to let in London and interest in this remaining space is healthy.

Given the success of our development lettings, the higher quality of our rental income and reduced speculative risk in our development programme, we have recommended a final dividend of 10.55p per share taking the total dividend for the year to 35.0p per share, up 9.9%. We aim to maintain our progressive dividend policy from this level.
Some have suggested our current market positioning is more prudent than exciting. I am happy with that description. As risk has been rising outside the business, we have been reducing risk inside the business. Ongoing challenges include appropriately managing the changing balance between supply and demand in London offices and responding to the evolution of consumer habits in retail. And next month, we face the prospect of a UK exit from the European Union.

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We believe a vote to leave the EU would lead to business uncertainty while negotiations take place on an exit treaty. Uncertainty slows decision-making. Over the short term, we anticipate this would drive down occupational demand in our market. In turn, this would lead to falling rental values and a reduction in construction commitments, particularly in London. So an exit could be painful for the property industry and those it supports. But there is a higher principle at play here. This is a decision for the British people, not businesses. It is up to individuals – including those amongst our customers, communities and partners – to decide what’s best. As guardians of shareholder capital, our responsibility is to position the company so it can thrive whatever the outcome. That’s what we have done.

After another strong performance, the business is in terrific shape with the financial resources needed to address future opportunities. And we have a team of great people who are imaginative, but disciplined, in the way they manage assets – a team that is absolutely focused on our core purpose of providing the right space for our customers and communities.
As of 07:19 BST, Tuesday, 17 May, Land Securities Group plc share price is 1,139.00p.