Property & Construction Daily

The Property & Construction Daily provides a sector-specific comment from leading analyst Alastair Stewart. His daily perspective provides a round-up of market statements, news, economics and views from the property and construction sectors.

<< Back to Property & Construction Daily archive

May 17, 2024

LAND, BBOX, FPO, SOHO | Fortnight ahead

Company News

Land Securities Group (LAND, 690p, £5,140m mkt cap)

Leading UK commercial property investment, development and management group. FY (Mar) results. EPR earnings -5.6%, £371m; loss before tax, £341m (FY 23, -£622m); EPRA EPS -5.6%, 50.1p; divs +2.6%, 39.6p; IFRS net assets, £6,447m (£7,072m); EPRA TNAVPS, 859p (936p); net debt, £3,517m (£3,287m); LTV, 35.0% (31.7%); portfolio valuation -2.7%, £9,963m.

Trading: “Our continued operational outperformance, with rising occupancy and positive rental uplifts in retail and London, is driving robust like-for-like rental income growth and demonstrates the importance of owning and operating the best-in-class real estate. Around 80% of our portfolio is now invested in 12 places with significant scarcity value, where our competitive advantages in shaping and curating these places mean we expect like-for-like rents to continue to grow.” Portfolio – 62% of portfolio in Central London; 18% major retail destinations, 7% mixed-use urban, 12% (“subscale, planned for divestment over time”). Investment – £225m assets disposed at 1% discount to Mar 23 book value; £136m of acquisitions and £220m of development capex. Portfolio valuation – the impact of rising rates principally affected H1, as yields remained flat in the final quarter and c. 60% of the portfolio was effectively stable in value in H2.

Outlook: “Following a reset of values over the past two years driven by rising interest rates, the stabilisation in rates and evidence of continued rental growth is starting to attract increased investor interest for the best assets. Around 60% of our portfolio already showed stable values in the second half and overall yields were largely stable in the final quarter. The quality and return prospects of our portfolio are further bolstered by our strong balance sheet. After a period of proactive capital recycling, most recently with over £600m of non-core assets sold in the past seven months, we have meaningful capacity to invest in high quality assets that add to our best-in-class portfolio at what we believe to be an attractive point in the cycle”.

Tritax Big Box REIT (BBOX, 168p, £3,150m)

Real estate investment trust investing in ‘big box’ logistics properties. Completion of combination and trading update. The all-share combination with UK Commercial Property REIT (UKCM, 73p, £947m) has become effective and 577 million new BBOX shares have been admitted today.

Outlook: “We are seeing an encouraging uptick in levels of activity in our development pipeline. Many occupiers that deferred decision making in 2023 have moved forward in 2024 and we have 1.5 million sq ft of new development transactions in legals, and a strong pipeline in negotiations. In addition, freehold development sales are expected to contribute at least £15m of DMA income in the year. Through rent reviews, lettings and regears we are making good progress capturing the significant reversion within our investment portfolio. In addition, we continue to take advantage of market conditions to selectively acquire mispriced assets. These factors together with stabilised yields collectively support our positive outlook for 2024”.

First Property Group (FPO, 19p, £21m)

Property fund manager and investor with operations in the UK and Central Europe. FY (Mar) trading update.

Guidance: “Underlying trading profits are expected to be in line with market forecasts”. Carrying value of the group’s net assets reduced due to: the write down in value of the group’s share in Fprop Opportunities, as reported on 8 November; and a reduction in the market value by the group’s directly owned office block in Gdynia, Poland. The group owes deferred consideration of €12m in respect of the Gdynia property, which is due for payment on 12 June. It is around 30% leased (up from 2% leased at purchase) and at that level of leasing makes a small operating loss of around €30,000 on an annualised basis. “The group is in discussions to restructure the deferred consideration and is hopeful of a positive outcome. However, in view of the due date of the liability, the directors have resolved to impair the value of the property by £3.7m to match its value against the value of the liability”. As a result, £3.7m will be debited from the P&L FY 24 and will result an overall loss in the financial year, subject to audit. “This deduction is not as a result of a deterioration in the underlying trading performance of the Group and comprises a non-cash item”. FY results, 26 June.

Triple Point Social Housing REIT (SOHO, 61, £240m)

Real estate investment trust investing primarily in newly developed social housing assets, with a focus on supported housing. Independent review of investment management arrangements. NAV and dividend announcements. Q1 (Mar) NAVPS, 114.2p (31 Dec, 113.8p). Q1 div, 1.37p. FY (Dec) div guidance: “While rent collection in the first three months of 2024 has increased relative to 2023, the Board has decided to keep the dividend target flat to preserve dividend cover whilst the Investment Manager concludes the transfer of 38 properties from Parasol to Westmoreland and proceeds with the proposed sale of a portfolio of properties (as per the Company’s portfolio sale and lease transfer announcement of 3 May. As a result, the Company is targeting an aggregate dividend of 5.46p for the financial year ending 31 December”.

Fortnight ahead

17 May 24 – Fortnight ahead
Download Insight as PDF

This communication is provided for information purposes only, and is not a solicitation or inducement to buy, sell, subscribe, or underwrite securities or units. Investors should seek advice from an Independent Financial Adviser or regulated stockbroker before making any investment decisions. Progressive Equity Research Ltd (“PERL”) does not make investment recommendations.

Opinions contained in this communication represent those of PERL and/or our affiliates at the time of publication and PERL does not undertake to provide updates to any opinions or views expressed. PERL does not hold any positions in the securities mentioned in this communication, however, PERL’s directors, officers, employees, contractors and affiliates may hold a position,  and/or may perform services or solicit business from, any of the companies or related securities mentioned.

Any prices quoted in our research are as at the previous day’s close.