Land Securities Group plc

For the half year, like-for-like income growth was 5.2% across the portfolio, EPRA EPS was up 3.2%, and the interim dividend was up 2.2%. NTA per share was down slightly to 863p, or 1.3%, mainly due to the sale of nearly GBP 650 million of low-returning assets, which cost about 1% to NTA. Gross to net margin improved by 130 basis points to 87.7%, and net rental income was up GBP 15 million, supported by GBP 12 million of like-for-like income growth. Office like-for-like income rose 6.8% with 6% uplifts on relettings and renewals, while retail like-for-like income rose 5%; office ERV grew 3.1% and retail ERV grew 2.2%. Full-year guidance was raised: like-for-like net rental income is now expected to grow around 4% to 5%, and FY26 EPS growth is expected to be at the top end of the 2% to 4% range. FY30 EPS potential was raised from around 60p to 62p. The sale of QAM is expected to reduce reported earnings for the year by GBP 7 million, and for FY27 by a further GBP 15 million.

Mark Allan framed the quarter as evidence that Landsec's repositioned portfolio is working: best-in-class offices and major retail now make up over 90% of income, and strong customer demand is still driving rental growth. He emphasized sustainable income and EPS growth as the company's primary objective, and said the strategy is creating clearer capital allocation decisions and lower cyclicality over time. His tone was confident and explicit that the company sees no signs of demand abating in its core markets.

Vanessa Simms said the half-year was marked by stronger operational performance, a record occupancy level, and leasing ahead of passing rent. She highlighted that gross to net margin improved to 87.7%, overhead costs fell by GBP 2 million, and finance costs rose as expected due to higher average borrowings and a slightly higher weighted average cost of debt. She also pointed to a robust balance sheet with LTV at 38.9%, average debt maturity of 8.9 years, no refinancing need until 2027 at the earliest, and a target to bring net debt to EBITDA below 7x within 2 years and LTV below 35% over time.

Analysts focused on whether retail ERVs are lagging real leasing evidence, how buybacks fit into capital allocation, and whether residential or even student housing could be alternatives to the current development plan. Management said retail ERVs are less important than the actual leasing evidence, noting lettings are occurring 10% ahead of ERV and retailer sales across the portfolio have risen nearly 20% versus 3% for the wider market. On buybacks, Mark Allan said they remain on the framework but current capital deployment into major retail is more accretive, while also saying the company does not have a precise share-price trigger. He also said student housing is not something Landsec plans to deploy into, and residential decisions are more likely to be revisited toward the end of 2026 once policy changes and relative returns are clearer.