Landsec H1 results steady - with eye on flexible offices of the future
Landsec’s results announced on 13th November show that the company is financially steady, in spite of pressure on retail property returns and on the London office market.
Investment banking research firm Liberum commented on the results as positive, and in line with forecasts, stating: “Low financial gearing limits downside risk and provides significant fire power to acquire new assets or retire equity in due course.”
UBS analysts noted that Landsec has been testing the flexible office market with a view to launching a new service in 2019. Landsec chief executive Robert Noel says: “In London, we’ve expanded our pipeline of office development opportunities to £2bn and will be launching a new flexible office product in the new year, catering for increasing customer demand for flexible, serviced solutions.”
UBS states that this offering will start with 36,000 sq ft at 124 Victoria Street. Landsec is also set to roll out a Landsec Lounge at different sites following success at 80 Victoria Street and 20 Eastbourne Terrace. As reported my MBS in July, the flexible office market is an increasingly significant development in building use, and the market is currently led by WeWork which has been buying properties around the capital.
Landsec has been moving away from secondary retail sites and short-let older offices, looking instead at newer build properties. Liberum estimates the company’s development pipeline has increased by 2 million sq feet. This includes a pre-let agreement with Deutsche Bank for a new London headquarters at 21 Moorfields on a 25-year lease.
Noel comments: “We remain alert to market risks but are confident in our current positioning and excited about the future.”