Real estate giant has three schemes in the pipeline to deliver 6,000 homes as it reports profit growth
Landsec is planning major sales of its office portfolio to fund its pivot toward housing development, which it believes will offer higher structural growth and lower volatility.
The FTSE100 landlord plans to establish a 拢2bn+ residential platform by 2030, according to its latest results.
Accounts for the year to 31 March 2025 said Landsec would fund the strategy by rotating 拢3bn of capital out of 鈥渙ffices, non-core investments and low or non-yielding pre-development assets鈥�.
Regarding offices specifically, Landsec said it aimed to reduce its capital employed in the sector by 拢2bn over two to five years.
Landsec said it was 鈥渧ery confident in the near term income growth prospects of our high-quality London office assets鈥�, but that longer term there were 鈥渇ewer supply constraints, and demand and hence rents are likely to be more cyclical鈥�.
鈥淭he growth in demand for homes, however, is more structural, as it is underpinned by long-term demographic trends,鈥� it said.
鈥淭his means residential income and values have been much less volatile historically and we expect this to remain the case going forward.鈥�
The firm has three major housing-led schemes in the pipeline. It started on infrastructure works and completed demolition on the first phase of its consented 1,800-homes Finchley Road scheme in north London.
>>See also: Landsec puts 拢200m Bankside office on hold
Detailed planning for the first phase of its planned 1,700-home Mayfield scheme is expected in the second half of the year, with delivery to begin from 2026 onwards.
A decision on a planning submission for a 2,800-home masterplan in Lewisham, south London is also expected.
The landlord also set out plans to increase investment in major retail by a further 拢1bn over the next one to three years.
The business invested 拢600m of capital in two retail assets, Liverpool ONE and Bluewater, in the past year, and sold 拢0.4bn of 鈥渁geing hotels with a substantial capex bill looming鈥�.
Revenue was up marginally from 拢824m to 拢842m and the company flipped from a pre-tax loss to profit.
Pre-tax profit stood at 拢393m, which was driven largely by rising property valuations. The net surplus on revaluation of investment properties in the period was 拢91m, compared to a deficit of 拢628m last year, which resulted in a 拢341m loss.
Allan said: 鈥淥ur portfolio again delivered very strong performance with like-for-like net rental income growth of 5.0%, supporting growth in both earnings and portfolio valuation over the year.
鈥淥wning the right real estate has never been more important and, with a very healthy pipeline of occupier demand, this trend looks set to continue, providing a clear trajectory for further near and medium-term EPS growth.鈥�
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