REG - Land Sec. Group PLC - Final Results
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RNS Number : 2400E Land Securities Group PLC 14 May 2026
14 May 2026
LAND SECURITIES GROUP PLC ("Landsec")
Results for the year ended 31 March 2026
Rents grow at fastest pace in nearly two decades. Occupancy increases to
20-year high.
Business now lower risk with clearer, stronger growth.
Mark Allan, Chief Executive of Landsec, commented:
"Over the past few years we have actively positioned Landsec for a higher
inflation and higher interest rate world. We have focused our portfolio on the
best quality locations where customer demand is highest, scaled back
development, reduced our overhead costs and maintained our strong capital
base.
Occupancy is now up to a 20-year high and rents are growing at their fastest
pace in nearly two decades. As a result of our actions, our strong top line
growth will increasingly flow through to an acceleration in EPS growth in the
near and medium term. Despite elevated geopolitical risks, we remain confident
in the potential to deliver c. 5% CAGR in EPRA EPS between now and 2030."
Financial highlights
2026 2025 2026 2025
EPRA earnings (£m)(1)(2) 382 374 Profit before tax (£m) 346 393
EPRA EPS (pence)(1)(2) 51.4 50.3 Basic EPS (pence) 46.2 53.3
EPRA NTA per share (pence)(1)(2) 882 874 Net assets per share (pence) 882 877
Total accounting return (%)(1)(2) 5.6 6.4 Dividend per share (pence) 41.2 40.4
Group LTV ratio (%)(1)(2) 38.7 39.3 Net debt (£m) 4,234 4,341
¾ EPRA EPS(1)(2) at top end of guidance, up 2.2% to 51.4p, as 4.6% LFL
income growth and 15% fall in overhead costs more than offset 1.8% EPS impact
from sale of QAM, driving 2.0% growth in dividend
¾ EPRA NTA per share up 2.2% in second half and 0.9% for the full year,
with strong customer demand driving an acceleration in ERV growth to 6.4% for
the year, and IFRS profit before tax of £346m
¾ Resilience of EPRA EPS underpinned by robust capital base, with 8.6-year
average debt maturity twice as long as the UK sector average, no need to
refinance debt until 2028, and ND/EBITDA of 8.4x
Guidance
¾ FY27 like-for-like net rent expected to grow c. 3-5%, with no signs of
slowdown in customer demand
¾ FY27 EPRA EPS expected to be stable vs FY26, in line with previous
guidance, as growth in underlying earnings is offset by -4% EPS impact from
full-year effect of sale of QAM finance lease
¾ FY28 EPRA EPS expected to see high single digit percentage growth, based
on current positive momentum in development leasing and like-for-like income
growth
¾ Continue to see potential for FY30 EPRA EPS to grow to c. 62 pence,
underpinned by positive LFL income growth and development leasing, implying c.
5% CAGR in EPS over FY27-FY30
¾ Expect net debt/EBITDA to reduce to below 7x within next two years as
income grows and committed development exposure comes down to c. 2% of
portfolio value in next few months
Operational highlights provide strong support for continued income growth
¾ LFL net rental income up 4.6%, comfortably ahead of initial c. 3-4%
guidance for the year, with rental uplifts on relettings/renewals almost
doubling to 15% vs 8% over prior year
¾ EPRA occupancy up 80bps on a LFL basis to 98.0%, the highest level in two
decades
¾ Continued customer demand for our best-in-class locations drives
acceleration in ERV growth to 6.4%, the highest level in nearly 20 years,
creating further room for future income growth
Office-led LFL income up 6.0%, as portfolio reversion rises to 17%
¾ LFL net rental income up 6.0%, with occupancy up 30bps to a decade-high
of 98.6%, £21m lettings signed or in solicitors' hands 7% above ERV, and
relettings/renewals 13% above previous rent
¾ ERVs up 7.1%, well ahead of guidance, representing the highest level of
growth in ten years
¾ Reversionary potential up to 17%, underpinning low/mid-single digit LFL
income growth for FY27 onwards as capturing reversion is largely reliant on
lease events now that portfolio is effectively full
¾ Capital values -0.1%, as strong ERV growth is offset by 14bps yield
softening and the 1.6% impact of higher build cost and business rates, with
further mid-single digit ERV growth expected this year
¾ Strong leasing interest in recent developments driving ERVs up, with
£45m of ERV which completed during second half of the year already 54% let,
and a further £35m completing this summer
¾ Sold £346m of offices ahead of plan, capitalising on pick-up in
investment market activity
Retail-led LFL income up 5.5%, as rental uplifts more than double
¾ LFL net rental income up 5.5%, with occupancy up 100bps to a 20-year high
of 97.7%, £49m lettings signed or ISH 11% above ERV, and rental uplifts on
relettings/renewals more than doubling to 15%
¾ Retail sales up 6.3% vs 1.1% for UK average, as outperformance of our top
destinations grows
¾ ERVs up 5.8%, comfortably ahead of guidance, representing the highest
growth in two decades
¾ Target to deliver 4.5-7% CAGR in income from existing portfolio by FY30
via combination of capturing growing reversion, turnover income,
commercialisation and small capex projects
¾ Values up 4.6% driven by ERV growth, with further mid-single digit ERV
growth expected this year
¾ Selectively progressing highly accretive capex projects, with decent
visibility on future acquisition opportunities expected to come to market
Robust capital base, with £705m of disposals and net debt/EBITDA set to
reduce to less than 7x
¾ Resilience of earnings underpinned by robust capital base, with the
longest average debt maturity in the UK REIT sector at 8.6 years, 8.4x net
debt/EBITDA and LTV down 60bps to 38.7%
¾ Expect net debt/EBITDA to reduce below 7x within next two years as
reversion is captured and current developments lease up, with LTV expected to
reduce to below 35% over time
¾ Committed development capex down to £185m and no meaningful new
commitments planned in next c. 18 months, prioritising new investment in
retail given high income returns and high income growth
¾ Sold £705m of low-returning assets, resulting in a cost to NTA of 1.1%
but broadly neutral impact on EPS, aside from impact of turning residual QAM
finance lease income into a capital receipt on sale
Continued progress in preparing for medium-term residential-led opportunity
¾ Majority of 9,000-home pipeline now has consent following the detailed
planning consent for first 879 homes at Mayfield, Manchester and
outline/detailed consents for 2,800 homes at Lewisham, London
¾ Positive engagement with public sector partners to improve viability, but
limited capex in short term
¾ Opportunity to build £2bn+ platform with higher income growth and lower
cyclicality in medium term
1. An alternative performance measure. The Group uses a number of financial
measures to assess and explain its performance, some of which are considered
to be alternative performance measures as they are not defined under IFRS. For
further details, see the Financial review and table 14 in the Business
analysis section.
2. Including our proportionate share of subsidiaries and joint ventures, as
explained in the Financial review. The condensed consolidated preliminary
financial information is prepared under UK adopted international accounting
standards (IFRSs and IFRICs) where the Group's interests in joint ventures are
shown collectively in the income statement and balance sheet, and all
subsidiaries are consolidated at 100%. Internally, management reviews the
Group's results on a basis that adjusts for these forms of ownership to
present a proportionate share. These metrics, including the Combined
Portfolio, are examples of this approach, reflecting our economic interest in
our properties regardless of our ownership structure. For further details, see
table 14 in the Business analysis section.
A live video webcast of the presentation will be available at 10.00am BST. A
downloadable copy of the webcast will then be available by the end of the day.
We will also be offering an audio conference call line, details are available
in the link below. Due to the large volume of callers expected, we recommend
that you dial into the call 10 minutes before the start of the presentation.
Please note that there will be an interactive Q&A facility on both the
webcast and conference call line.
Webcast link:
https://www.investis-live.com/landsec/69e8c9d1dc51410011bf0fde/amcrt
(https://urldefense.proofpoint.com/v2/url?u=https-3A__www.investis-2Dlive.com_landsec_69e8c9d1dc51410011bf0fde_amcrt&d=DwMF-g&c=bKNseOHsszsRCtLFfd6XtA&r=nhwngkppC60pkjnOXJv3I_aoEitQG8nB9YnDnZyK3jY&m=0r1EWQ3TOfBugF1lGa9byeYlBNFPKxFkbUl2h_W0QQP4GlpkOSP-ArbsAfKWwExf&s=5Q_4M0pLAq87Kh8C68Ze77SSdK4FT5ZJx3LCgRYkQkM&e=)
Conference call details:
Call title: Landsec Full Year Results 2026
United Kingdom (Local): +44 20 3936 2999
United Kingdom (Toll-Free): +44 800 358 1035
Global dial in numbers:
https://www.netroadshow.com/events/global-numbers?confId=70236
(https://www.netroadshow.com/events/global-numbers?confId=70236)
Access Code: 156821
An audio recording of the conference call will be available until 27 May 2026
on:
United Kingdom: +44 20 3936 3001
Access Code: 197256
Forward-looking statements
These full year results, the latest Annual Report and Landsec's website may
contain certain 'forward-looking statements' with respect to Land Securities
Group PLC (the Company) and the Group's financial condition, results of its
operations and business, and certain plans, strategies, objectives, goals and
expectations with respect to these items and the economies and markets in
which the Group operates.
Forward-looking statements are sometimes, but not always, identified by their
use of a date in the future or such words as 'anticipates', 'aims', 'due',
'could', 'may', 'should', 'expects', 'believes', 'intends', 'plans',
'targets', 'goal' or 'estimates' or, in each case, their negative or other
variations or comparable terminology. Forward-looking statements are not
guarantees of future performance. By their very nature forward-looking
statements are inherently unpredictable, speculative and involve risk and
uncertainty because they relate to events and depend on circumstances that
will occur in the future. Many of these assumptions, risks and uncertainties
relate to factors that are beyond the Group's ability to control or estimate
precisely. There are a number of such factors that could cause actual results
and developments to differ materially from those expressed or implied by these
forward-looking statements. These factors include, but are not limited to,
changes in the political conditions, economies and markets in which the Group
operates; changes in the legal, regulatory and competition frameworks in which
the Group operates; changes in the markets from which the Group raises
finance; the impact of legal or other proceedings against or which affect the
Group; changes in accounting practices and interpretation of accounting
standards under IFRS, and changes in interest and exchange rates.
Any forward-looking statements made in these full year results, the latest
Annual Report or Landsec's website, or made subsequently, which are
attributable to the Company or any other member of the Group, or persons
acting on their behalf, are expressly qualified in their entirety by the
factors referred to above. Each forward-looking statement speaks only as of
the date it is made. Except as required by its legal or statutory obligations,
the Company does not intend to update any forward-looking statements.
Nothing contained in these full year results, the latest Annual Report or
Landsec's website should be construed as a profit forecast or an invitation to
deal in the securities of the Company.
Chief Executive's statement
Well placed to deliver acceleration in EPS growth in near and medium term
Over the last few years, we have actively repositioned Landsec for a higher
inflation, higher interest rate environment. Our best-in-class portfolio,
market-leading operating platforms, and strategic discipline means our
performance has been strong, despite the persistently elevated levels of
uncertainty and volatility in the external environment. Although the current
global macro outlook is once again uncertain, we are not seeing any signs of
this impacting customer demand, so the unique combination of these three
factors means the outlook for Landsec remains positive.
The high quality of our portfolio and operating platforms has again been
evident over the past year:
¾ Our EPRA occupancy is up to 98.0%, which is the highest level in two
decades;
¾ Our like-for-like net rental income is up 4.6%, comfortably ahead of our
c. 3-4% initial guidance, which means we have now delivered 4.0% CAGR in
like-for-like net income over the last four years;
¾ Our uplifts on relettings/renewals have almost doubled to 15%, up from 8%
a year ago, underlining the growing reversion and hence future income growth
potential within our portfolio.
At the same time, our strategic discipline is evident in how Landsec is
positioned today:
¾ Our speculative London office development pipeline is completing over the
next few months, allowing us to capitalise on very strong leasing demand,
which will drive significant income growth. This means our development
exposure will be less than 2% of our portfolio in a few months' time, with no
plans to add much to this in the next c. 18 months, as risks around returns on
future projects are elevated;
¾ Our overhead costs are down to £62m, marking a reduction of 26% over the
last three years. This represents the lowest level in more than 20 years and
ensures our income growth flows through to earnings and dividends for
shareholders effectively;
¾ Our 8.6-year average debt maturity is twice as long as the average for
the UK REIT sector and 89% of our debt cost is fixed or hedged. Coupled with
our low committed development capex of £185m, new financing requirements are
modest, which protects our earnings from fluctuations in interest rates.
As a result of our actions, Landsec is now positioned with a lower risk
profile and a clearer, stronger growth outlook, as continued top line income
growth will increasingly flow through to an acceleration in EPS growth, both
in the near and medium term:
¾ For FY26, our EPRA earnings were up £8m to £382m despite the -£7m
impact from the sale of QAM, which turned future finance lease income into a
capital receipt on sale. This earlier than expected sale was not part of our
initial forecast, so adjusted for the 1.8% EPS impact of this, our 2.2%
reported EPS growth for the year was at the very top end of our initial c.
2-4% guidance;
¾ For FY27, we expect EPRA EPS to be stable vs FY26, in line with our
previous guidance, as c. 4% underlying growth is offset by the full-year
impact of the sale of QAM;
¾ For FY28, based on current momentum, we expect EPRA EPS to grow by a high
single digit percentage, driven principally by leasing up our current London
office pipeline and continuing to capture the growing reversion in our
existing portfolio;
¾ For FY30, as we set out in November, we see the potential for EPRA EPS to
grow to c. 62 pence, implying c. 5% CAGR from here. Around 80% of this growth
is derived from our existing portfolio and platform, as the impact of the
recent rise in swap rates is largely mitigated by our long debt maturity.
Naturally, we continue to explore opportunities to further improve on this
growth outlook.
Financial results
We delivered a positive set of financial results for the year to March 2026.
Our 4.6% growth in like-for-like income and 15% reduction in overhead costs
meant our EPRA EPS was up 2.2% to 51.4 pence, despite the 1.8% impact of the
sale of QAM. This supported 2.0% growth in dividend. Our strong leasing
activity drove an acceleration in ERV growth to 6.4%, yet this was partly
offset by some minor yield softening and a few asset specific movements, so
overall values were up 1.2% for the year. IFRS profit before tax of £346m was
impacted by a £74m net loss on the sale of £705m of assets which generated
little or no return, yet NTA per share was up 0.9% for the year and 2.2% in
the second half. As a result, our balance sheet remains robust and with only
£185m of committed development capex remaining, no plans to add any
meaningful new development commitments in the next c. 18 months, and income
set to grow materially, we expect our net debt/EBITDA to reduce to below 7x
within the next two years.
Table 1: Highlights
Mar 2026 Mar 2025 Change %
Net rental income (£m) (1) 562 552 1.8
EPRA earnings (£m)(1) 382 374 2.1
IFRS profit before tax (£m) 346 393 (12.0)
Total accounting return (%) 5.6 6.4 (0.8)
EPRA earnings per share (pence)(1) 51.4 50.3 2.2
Dividend per share (pence) 41.2 40.4 2.0
Combined portfolio (£m)(1)(2) 10,836 10,880 (0.4)
EPRA Net Tangible Assets per share (pence)(1) 882 874 0.9
Adjusted net debt (£m)(1) 4,215 4,304 (2.1)
ND/EBITDA (period end) (x)(1) 8.4 8.9 (5.6)
Group LTV ratio (%)(1) 38.7 39.3 (0.6)
1. Including our proportionate share of subsidiaries and joint ventures, as
explained in the Presentation of financial information in the Financial
Review.
2. Includes owner-occupied property and non-current assets held-for-sale.
Occupational markets
Occupational markets for both office and retail continue to be characterised
by two well established trends: a significant concentration of demand on the
very best space coupled with heavy constraints on new supply. Unsurprisingly,
therefore, upward momentum in rents persists for our best-in-class portfolios.
In retail, c. 85% of our assets sit in the top 1% of retail destinations in
the UK which provide brands with access to c. 31% of national in-store retail
spend. Sales growth in our locations has outperformed the UK national average
by 19ppt over the past four years, so these are the destinations brands
continue to focus on in terms of investing in new stores. Margin pressure for
brands elsewhere is only accelerating this trend. Meanwhile, new supply is
zero, as replacement costs are roughly double existing values.
In office, our portfolio is similarly concentrated on the very best space. We
own c. 0.5% of the c. 900m sq ft of total office space in the UK - virtually
all of which is located in the two most highly valued locations in the
country, the West End and the City, including Bankside. These locations tend
to be highly prized by international businesses because of the depth of access
they provide to the very best global talent. And even within these best
locations we are outperforming, with occupancy of 98.6% versus 93.3% for the
central London market as a whole. Again, new supply is constrained with build
cost inflation and higher interest rates limiting development viability, so
project starts are being deferred and rents are rising.
The ongoing adoption of emerging technologies such as AI seems increasingly
likely to act as a further accelerant of occupiers' focus on the very best
space. Whilst back office and processing roles are likely to reduce, any
impact of this in high value locations in London is more than offset by the
creation of new roles (or indeed new businesses) enabled by technology, and
new demand from international businesses. At our recently opened Myo Kings
Cross, for example, nearly 80% of all lettings have been to AI or AI adjacent
businesses and the building is on track to be virtually full only c. 9 months
after opening. In retail, brands expect the rise of AI and agentic commerce to
put even more focus on the value of the physical experience and consumer
connection as part of a unified commerce ecosystem, which adds further weight
to the 'fewer, bigger, better stores' trend that has been so evident over the
past few years.
In an environment which is changing rapidly, our unique and irreplaceable edge
remains clear: we have two market-leading platforms and our portfolio is
focused firmly at the top end of the market where the demand from customers is
strongest. Our portfolio is effectively full, rents are rising and our
reversionary potential is growing, so the outlook for continued healthy
like-for-like income growth is clear.
Investment markets
Supported by the strong occupational outlook for best-in-class assets and a
stabilisation in interest rate outlook, investment activity recovered from a
low base during 2025 and accelerated towards the end of the year and into the
first few months of 2026. In office, this was principally focused on core-plus
or value-add assets which offer the opportunity to capture rental growth, with
increasingly larger lot sizes. In major retail, investment activity started to
pick up as well, but there are still over £3bn of assets in the hands of
parties who are not natural long term owners which will likely come to market
in the next year or two.
It is too early to assess what the longer term impact of the Middle East
conflict will be on this growing momentum in investment markets, yet we are
mindful that the renewed uncertainty around the outlook for global interest
rates could impact investor decision making in the near term. That said,
interest rates are just one factor influencing capital allocation decisions,
as other factors, such as the relative return outlook vs alternative sectors
such as private credit, the outlook for supply/demand, and hence the
conviction in future rental growth, arguably all look more favourable than
they did c. 6-12 months ago.
While portfolio rotation is an important part of our strategy, we remain
disciplined on price and are not reliant on investment activity to drive
growth, as we have significant embedded growth within our existing business.
Equally, with committed capex now down to £185m, we are not reliant on
disposals to fund any future commitments. Indeed, even without meaningful
disposals or acquisitions, we could still deliver c. 80% of the potential c.
5% CAGR in EPS by FY30 and see net debt/EBITDA fall below 7x.
Clear priorities in terms of capital allocation
As we execute our strategy, we maintain our clear framework for capital
allocation decisions. Alongside our view on risk, this is based on two
factors. Firstly, how our investments contribute to income and EPS growth in
the near term, and secondly, how they impact our portfolio mix such that this
growth can be sustained in the medium to longer term. We prioritise
investments that deliver on both factors but beyond that, our decisions will
always seek to enhance at least one of these, without distracting from the
other.
Based on these considerations, we sold £705m of assets over the year. This
included £261m of retail parks where the 6.4% income return was reasonable
but income growth was limited; a £245m 1970's office block (QAM) which will
be vacated in 2028 and requires wholesale redevelopment; £101m of London
offices where the 4.9% income return was modest; and £72m of pre-development
assets which had a negative in-place income return and would have required
over £400m of capex to develop.
The clarity and focus this framework provides continues to guide our
priorities for the near future. Growing our investment in major retail
destinations remains our highest conviction call, given its high income yield
and the attractive income growth on offer for the right assets. We looked at a
few acquisition opportunities over the past twelve months and have decent
visibility about future opportunities, but we remain disciplined about
quality, future capex risks and price. As such, we chose not to progress any
acquisitions during the year but remain active in assessing future
opportunities.
With £346m of disposals to date, we are ahead of plan in terms of releasing
capital from offices. We will continue to look at further opportunities to
recycle capital out of offices as our assets generally score well relative to
current investor criteria and the upside to EPS from reinvesting this capital
into retail at a c. 200bps pick-up in net effective income return and higher
like-for-like income growth is meaningful.
Based on our framework, we believe that investment in major retail remains
more attractive than office or residential development at this stage. Our
London office development programme will complete in the next few months, with
our recently completed schemes now 54% let and strong interest in the
remaining space. We have no plans to commit further capital to speculative
office development as things stand, so our committed development exposure will
be down to £0.2bn by the end of the summer and we continue to make progress
in releasing further capital from low/non-yielding pre-development assets.
On residential, engagement with our public sector partners to secure policy
support for our build-to-rent projects has been encouraging with steps such as
the Government's and GLA's package of acceleration measures for London now
offering potential routes to improve development viability. As such, we will
continue to invest time in seeking to unlock these opportunities, although
capex investments will remain very limited for now and holding costs are low.
If we are able to secure viable returns on these projects, lead times are such
that start dates will be no earlier than late 2027 in any event. We have not
assumed any upside from residential in our FY30 EPS potential, as this largely
benefits growth beyond that.
Having less capital tied up in low or non-yielding assets not only benefits
sustainable EPS growth, but also reduces our risk profile. As a result of this
step, and based on current leasing momentum, we now expect our net debt/EBITDA
to reduce to below 7x over the next two years. Maintaining our strong capital
base will always remain our first priority, but as part of our capital
allocation framework, we also continue to monitor the option of deploying
capital in our own shares. At present, we view investment in major retail as
more attractive from both a near-term and longer term perspective, but this
will remain a consideration in our capital allocation decisions going forward.
Outlook
It has never been more important to own the right real estate. Driven by the
focus and dedication of our highly capable teams across our best-in-class
platforms, the operational performance across our office and retail
portfolios, which combined make up 91% of our overall income, remains
market-leading.
This has resulted in CAGR in like-for-like net income of 4.0% over the last
four years and as reversion is growing, this should continue to deliver
attractive income growth in the future. With overhead cost now at a 20-year
low, a material reduction in capital employed in low/non-yielding development,
and an average debt maturity which is the longest in the sector, this top line
growth will increasingly flow through to an acceleration in EPS growth over
the coming years, principally driven by our existing portfolio and platform,
which will support continued growth in dividends.
We are mindful that global macro risks have increased and that it is still
difficult to assess the longer term effects of the Middle East conflict.
However, the trends which have supported our strong operational performance
remain very much intact. Moreover, as we are about to complete our c. £1bn
London development programme and are making strong progress on leasing, our
business now has a lower risk profile and a clearer, stronger growth outlook.
All in all, we see the potential to deliver c. 5% CAGR in EPRA EPS over the
next four years, including high single digit growth in FY28. Coming on top of
our existing 5.8% income return at NTA, this will result in an attractive
total return for shareholders.
Operating and portfolio review
Overview
We have created a unique, high-quality real estate portfolio which produces
£624m of annualised rental income and offers potential for material income
growth. This combined portfolio was valued at £10.8bn as of March and
comprises the following segments:
¾ Office-led places (50% of income): our well-connected, high-quality
office-led portfolio, which includes ancillary retail and other commercial
space, principally focused on multi-let assets in a small number of key areas
in the West End (61% of value), City & Southwark (33%) and Greater
Manchester (6%).
¾ Retail-led destinations (41% of income): our investments in a select
number of shopping centres and retail outlets, around 85% of which sit in the
top 1% highest selling retail destinations in the UK.
¾ Residential-led places (2% of income): our investments in four future
development projects in London and Greater Manchester, two of which still have
a meanwhile use as retail, with planning consent or allocation for c. 9,000
new homes.
¾ Other assets (7% of income): assets in sectors where we have limited
scale or competitive advantage and which we therefore plan to divest over
time, principally comprising retail and leisure parks.
Key objectives underpinning our strategy
Over time, income growth is the main driver of value growth in both real
estate and equity markets, so the overarching objective of the strategy we
announced just over a year ago is to deliver sustainable growth in income and
EPS, both in the near and long term.
Supporting this are nine key objectives we set out a year ago - five for the
short to medium term (i.e. 1-3 years) and four for the medium to long term
(i.e. 2-5 years). The distinction between these timeframes is deliberate, as
this distinguishes between what will drive EPS growth in the near term vs our
objectives in terms of capital allocation which are expected to underpin
growth in income and EPS in the long term. One year into this five-year plan,
the momentum on delivering on our objectives is positive.
In the near term, most of our EPS growth will be driven by our existing
platform and the assets we own today. This is what our first five objectives
are built on and where we are well on track:
¾ We continue to capture the growing reversion in our office/retail
portfolio, with uplifts on relettings and renewals up to 15% vs 8% in the
prior year and growth in like-for-like net rental income of 4.6%;
¾ We reduced overhead costs by 15% to £62m, one year ahead of our initial
target to reduce costs to less than £65m by FY27, marking a 26% reduction
since FY23;
¾ We have released £72m of capital from pre-development assets and expect
to make further progress towards our three-year target to release £0.3bn of
capital from this in the current year;
¾ We have exited 33% of our retail and leisure parks, which released £261m
of capital from assets which generated no real like-for-like income growth,
whilst the income yield we sold at was c. 100-150bps lower than income returns
for major retail destinations;
¾ We aim to grow our major retail platform by a further c. £1bn through c.
£0.2bn of investments in our existing assets and c. £0.8bn acquisitions and,
having invested £50m in high-yielding projects and consolidating ownerships
over the past year, we have good visibility on new acquisition opportunities.
This means our existing portfolio and platform are well placed to drive EPS
growth in the near term. As such, our decisions on development and capital
recycling are about making sure that in a few years' time, our asset mix is
such that we are as confident about the income growth prospects of our
portfolio then, as we are about our current portfolio today. This is what our
four longer-term objectives are built on:
¾ Our aim to deliver low to mid-single digit like-for-like income growth
p.a. is supported by an acceleration in ERV growth, as supply of high-quality
retail and office space remains constrained;
¾ We plan to release £2bn of capital employed from offices, which we
initially envisaged for FY27-FY30, yet ahead of schedule, we have already sold
£346m during FY26;
¾ We have already reduced office-led development by c. 50%, in line with
our objective, as development commitments are down from £1.1bn to £0.6bn and
will come down further to c. £0.2bn by mid-2026. We do not expect to commit
any meaningful further capital to development in the next c. 18 months and
intend to maintain structurally lower on-balance sheet development exposure
thereafter;
¾ We continue to make early-stage progress towards our medium-term
objective of establishing a £2bn+ residential platform and we are seeing
positive engagement from public sector partners on substantive plans to
improve viability of the four sizeable, well-located schemes in our pipeline.
Capturing reversion and driving like-for-like income growth
We have delivered another year of strong performance against this key
objective. Like-for-like net rental income was up 4.6%, with high growth in
both offices and retail. Occupancy increased 80bps on a like-for-like basis to
a two-decade high of 98.0% and rental uplifts on relettings/renewals across
the two main parts of our portfolio virtually doubled to 15%, up from 8% in
the prior year. On a like-for-like basis, our gross to net margin was up
1.6ppt due to a continued focus on cost efficiencies. As overall ERV growth
accelerated to 6.4%, up from 4.2% in the prior year, this means the potential
for continued income growth in the future is clear. Given our strong leasing
pipeline, we therefore expect the positive momentum across these metrics to be
sustained in the year ahead.
Table 2: Like-for-like income growth
Net rental income LFL net rental LFL occupancy change Gross to net LFL change
income growth
margin
in GtN margin
£m % ppt % ppt
Office-led 295 6.0 0.3 91.0 1.7
Retail-led 210 5.5 1.0 82.7 2.8
Residential-led 7 nm 3.0 nm nm
Other assets 50 (4.4) (1.5) 90.6 0.7
Total Combined Portfolio 562 4.6 0.8 87.1 1.6
Office-led places (50% of income)
Demand for high-quality office space in locations that offer the right
amenities and transport connectivity remains robust, which is driving
meaningful rental growth across our assets. For example, across our entire
2.3m sq ft Victoria estate we only have one 20k sq ft floor available, with
rents on recent lettings now over £100psf and negotiations on the latest
space we are delivering here significantly ahead of this. The upward pressure
on rents is further exacerbated by meaningful amounts of office space being
taken out of the market, for example for residential or hotel conversion.
Driven by the strong performance of our operations and leasing teams, our
occupancy remains market-leading, up 30bps to 98.6% - the highest level in
over a decade and materially outperforming the overall London office market at
93.3%. We completed 53 lettings and renewals during the year totalling £20m
of rent, on average 7% ahead of ERV. As our portfolio is effectively full, we
have little space to lease, yet we have a further £1m of lettings in
solicitors' hands, 7% above ERV. Uplifts on relettings and renewals during the
year were 14%, so alongside operating cost savings and growth in Myo income,
this drove 6.0% LFL rental income growth. ERV growth increased to 7.1%, which
represents the highest level in ten years, so our reversionary potential now
stands at 17%. This will support continued growth in LFL rental income in the
next few years, although we expect this to be at more normalised level than
over the past year, as our virtually full occupancy means capturing reversion
is now chiefly reliant on lease events.
In October, we opened our seventh Myo flex office, located next to Kings Cross
station. This is already 75% let, with leasing principally driven by a
combination of international AI and technology-led businesses, and we expect
this to be substantially full by the summer. Occupancy across our stabilised
Myo portfolio is 84% and rents achieved were in line with budget. In total,
Myo now makes up 5% of our income in our office-led business.
Retail-led places (41% of income)
The top 1% of all UK shopping destinations provide access to c. 31% of the
country's in-store, non-food retail spend, offering brands higher sales
densities and productivity than other formats. Around 85% of our retail assets
sit in this top 1%, which underpins their continued outperformance. Total
sales across our portfolio of £2.8bn were up 6.3% vs the prior year, with
footfall up 2.7% - both materially ahead of the BRC benchmarks of 1.1% and
0.1% respectively, as our locations continue to gain market share.
Since FY22, sales growth across our portfolio has outperformed the UK national
average by a cumulative 19ppt and this gap continues to widen. With annual
footfall of 170 million and a consumer reach of one in four people in the UK,
we provide brands with access to more footfall and a larger consumer reach
than any other retail platform in the UK. Supported by the unique data and
insights this offers us, we continue to invest in creating the best
experience, creating a virtuous circle of growing footfall driving higher
sales, which in turn attract the best brands, which then attract more
footfall, and so on.
The success of this translates into strong growth in income. Occupancy is up
100bps to 97.7%, which is the highest level in more than 20 years and
resulting in growing rental tension. We signed 250 leases totalling £36m of
rent on average 10% above ERV, which resulted in 5.8% ERV growth over the year
- the highest growth in two decades. Rental uplifts vs previous passing rent
on relettings and renewals more than doubled to 15%, compared to 7% for FY25
and 1% in FY24, underlining the rapidly growing reversionary potential in our
portfolio. As a result, like-for-like net rental income increased by 5.5%.
We have a record leasing pipeline, with £13m of lettings in solicitors' hands
on average 14% ahead of ERV and, in the case of relettings and renewals, 13%
above previous passings rent. Our portfolio is nearly full and with new supply
effectively non-existent, during the year we set out a target to deliver
4.5-7% CAGR in income across our existing retail platform over the coming
years. This reflects a combination of capturing the growing reversion across
our portfolio and growth in turnover income (3-4%), growth in
commercialisation income such as digital media, events and EV charging
(0.5-1%) and the investment of up to c. £200m in smaller accretive capex
projects (1-2%).
Residential-led places (2% of income)
The income in this part of our portfolio currently solely reflects the income
on our existing retail assets at Finchley Road and Lewisham, which are managed
with a view on maintaining development optionality for future residential
development. Overall, net income on a like-for-like basis was flat
year-on-year.
Other assets (7% of income)
Having sold the majority of our retail parks during the year, LFL occupancy
across our residual retail and leisure parks was down 150bps to 97.0% and,
reflecting this, like-for-like income for the period was down 4.4%. This also
reflects the impact of a reduction in rent on five cinema leases during the
prior year, but this performance has stabilised since.
Table 3: Operational performance
Annualised rental income Net estimated rental value EPRA occupancy(1) LFL occupancy change(1) WAULT(1)
£m £m % ppt Years
West End offices 136 192 98.7 (0.3) 6.1
City/Southwark offices 90 113 98.9 1.9 7.9
Manchester offices 28 30 96.3 2.9 4.0
Retail and other 57 58 99.3 1.1 5.9
Developments - 91 nm nm nm
Total Office-led 311 484 98.6 0.3 6.4
Shopping centres 206 214 97.6 1.1 4.6
Outlets 49 54 98.2 0.7 2.9
Total Retail-led 255 268 97.7 1.0 4.3
Developments 11 27 91.1 3.0 7.9
Total Residential-led 11 27 91.1 3.0 7.9
Retail and leisure parks 47 49 97.0 (1.5) 8.3
Total Other assets 47 49 97.0 (1.5) 8.3
Total Combined Portfolio 624 828 98.0 0.8 5.7
1. Excluding developments.
Releasing capital from lower-returning assets
With £705m of disposals, we have made strong progress on our objective to
release c. £3bn of capital over a five-year period from lower-returning
offices, retail/leisure parks and pre-development assets.
Our largest disposal was the sale of Queen Anne's Mansions (QAM) for £245m.
This Victoria office block has been fully let to the Government since the
1970's, but the Government intend to vacate the property once their lease
expires in December 2028. Given its age, the majority of the valuation was
linked to the asset's redevelopment potential, with the balance of value
stepping down in line with the receipt of rental income over the remainder of
the current lease. As such, this asset generated a c. 0% total return. We
also sold two smaller London assets for £101m, reflecting a net effective
income yield of 4.9%, and continue to explore opportunities to recycle further
capital from assets where upside is modest.
Across retail and leisure parks, we sold four assets for a combined £261m,
making up one-third of this portfolio. The 6.4% net rental income yield on
these was reasonable, albeit c. 100-150bps below major retail destinations and
LFL income growth is far lower. We expect fewer disposals from this segment in
the next twelve months, as the income profile of most remaining parks is more
attractive.
As part of our objective to reduce the c. £700m of capital employed in
pre-development assets we had at the start of the year by around half over a
three-year period, we sold two sites in Southwark, releasing £72m of capital
which generated a net income yield of -0.4%. We expect to make further
progress on releasing capital from this part of our portfolio over the next
twelve months.
Overall, our disposals over the past year released £705m of capital from
assets which generated limited or no return at a cost to overall NTA of 1.1%.
The residual finance lease income on QAM which would have been received as
income over FY25 and FY26 has now been received as a cash capital receipt on
sale, but aside from this, the overall EPS impact of these disposals was a
minimal -0.4%.
Acquisitions
Having made £720m of acquisitions in the prior year, we invested just £80m
in acquisitions over the past year. In November, we spent £48m on a newly
developed office in Oval we agreed to forward-purchase in the summer of 2021,
with a further £10m consideration deferred for up to 24 months. Earlier in
the year, we also increased our stake in Liverpool ONE from 93.7% to 96.5% at
a cost of £15m.
Development and investments in our existing assets
During the year we invested £445m in capex, including £217m for our on-site
office developments in Victoria, Southwark and Manchester, £21m for
repositioning traditional office space to MYO flex space and £48m in
pre-development assets, but spend across all this will come down materially
from here. We also invested £147m across the rest of our portfolio, including
£64m for smaller projects, leasing and maintenance across in retail, and
£74m in office, including £24m for our net zero investment programme.
Current projects
We are now close to completing our speculative London office development
programme, which is seeing strong customer interest. Our Timber Square
development (£33m ERV) completed recently and is 54% let to BP as their new
global HQ, with active customer interest covering double the remaining space.
Our new Myo in Kings Cross (£8m ERV) completed in October and is already 75%
let, driven principally by various AI and technology businesses. We expect
this to be substantially let by the summer. The small, newly completed office
in Oval we acquired in November as part of a forward purchase agreed in 2021
(£4m ERV) is 10% let, with a further 45% in advanced negotiations.
Following the completion of Timber Square, our second major project, Thirty
High, is on track for sectional completion during the summer. Given its
smaller floor plates and premium tower space offer, we always envisaged that
this would predominantly lease up post completion. With that date nearing, we
have active customer interest covering almost 100% of the space and expect
this to translate into strong leasing activity in the next couple of months.
Reflecting the strength of this interest, the ERV on the project increased by
17% to £35m.
Once fully let, these four projects are expected to produce c. £63m of
annualised rental income on a net effective basis. However, there is an
incremental £43m of interest costs associated with the investment in these
projects which will no longer be capitalised post completion, so we assume
this to result in a c. £6-8m drag on earnings in our FY27 guidance. This
impact is temporary, as this incremental interest expense will be more than
offset by rental income once these projects are let. Given the strong interest
and leasing progress to date, we remain confident our projects will lease up
within c. 12 months post completion, which should drive strong growth in
earnings in FY28.
Following the completion of Timber Square, our committed development exposure
is down from £1.1bn to £0.6bn, in line with our strategic objective to
reduce office development exposure by c. 50%. This will come down further over
the next few months as after the completion of Thirty High, our only committed
office project is our £154m development at Mayfield, Manchester. We are also
on site with £43m of smaller, high-yielding retail projects, including the
repositioning of the former House of Fraser department store at Bluewater for
a new 133,000 sq ft Next store; the extension of Primark's store at White
Rose, Leeds to double its footprint; and the creation of a new social eating
destination at Trinity, Leeds. As a result, our total committed development
capex is down to £185m.
Table 4: Committed pipeline
Project Sector Size Estimated completion ERV Market value Costs to complete TDC Gross yield on TDC
date
£m
sq ft £m £m £m %
'000
Thirty High, SW1 Office 299 Q2 FY27 35 436 57 446 7.8
Republic, Manchester Office 246 Q4 FY28 13 38 107 154 8.3
Various projects Retail 292 Various 4 N/A 21 43 9.8
Total 837 52 185 643 8.1
Potential future pipeline
Based on our capital allocation framework, investment in major retail
destinations remains most attractive in our view, both from a near as well as
medium term impact on income and EPS. As such, we do not plan to commit any
meaningful balance sheet capital to new development for the next c. 18 months.
For office development, we believe returns do not offer sufficient upside
relative to the returns we expect on our high-quality existing office assets.
Whilst higher rental growth could improve development returns, we would also
benefit from this market growth via our existing £7.0bn office portfolio.
Taking into account the higher level of risk in development, this means we see
little upside in selling our high-quality existing offices to redeploy the
same balance sheet capital into funding the development of new ones.
In residential the argument for development is more nuanced, as this would
shift our portfolio mix towards the higher income growth and lower cyclicality
we are aiming for in the long run. Currently, development returns are not
sufficient yet given the attractive long-term characteristics and political
support towards improving viability, this remains an option we think is worth
pursuing, especially as capital employed is low and capex remains limited for
the time being.
During the year, we secured a resolution to grant detailed planning consent
for the first phase of 879 homes at Mayfield, adjacent to Manchester's main
train station, and a resolution to grant a part outline and part detailed
planning consent for our 2,800 homes scheme in Lewisham, south-east London.
Combined with the existing outline and part detailed consent for 1,800 homes
at Finchley Road, north London and our site at MediaCity, Greater Manchester
which has an allocation for 2,700 homes, we therefore now have four projects
which could deliver c. 9,000 homes over the next decade.
Each of our projects benefits from strong transport connections, scale, and a
demonstrable need for more housing. Encouragingly, public sector policy is
becoming more supportive in terms of improving viability, e.g. with the
announcement in London of a reduction in affordable housing requirements from
35% to 20%, a 50% reduction in the Community Infrastructure Levy, and less
onerous design requirements. Our focus is on securing these and other policy
benefits, which could lead to an improved outlook returns in the future, as
this could add c. 50-75bps to current net yields on cost of c. 5.0%. Still,
for now, capex spend on these projects will be very limited, as taking into
account detailed design works, Building Safety Act approvals, and site
preparation, the earliest starts on would not be before late 2027.
Table 5: Pre-development assets
Project Current capital employed Proposed sq ft Proposed new homes Indicative TDC Potential Planning
£m
start date
status
'000 £bn
Office-led
Old Broad Street, EC2 n/m Consented
Liberty of Southwark, SE1 n/m Consented
Hill House, EC4 n/m Consented
Nova Place, SW1 n/m Consented
Timber Square Phase 2, SE1 n/m Consented
Total c. 250 1,350 1.9
Residential-led(1)
Mayfield, Manchester 1,700 0.9 2027 Consented
Finchley Road, NW3 1,800 1.2 2027 Consented
Lewisham, SE13 2,800 1.5 2028 Consented
MediaCity Phase 2, Salford 2,700 n/m n/m Design
Total c. 270 9,000 3.6
Other opportunities c. 90 n/m n/m Various
Total c.610 Various
1. Indicative figures given multi-phased nature of schemes; subject to change
depending on final scope, planning and design.
Irrespective of sectors, we are mindful of the negative impact on our
risk-profile and EPS growth of having large amounts of capital tied up in
development for prolonged periods. Looking forward, we therefore plan to keep
our exposure to committed development closer to about half of the c. £1bn it
has been over the last five years via a mix of lower activity levels and
working with capital partners on certain projects.
External portfolio valuation
Successfully delivering sustainable income growth over time underpins longer
term growth in property values, even though in the short term values will be
affected by changes in valuation yields. Yields were virtually stable over the
year and our strong leasing activity saw ERV growth accelerate to 6.4%, so
taking into account two specific movements in our office-led portfolio,
overall values were up 1.2% for the year, weighted entirely to the second
half.
The valuation of our office portfolio was virtually stable, as the upside from
strong 7.1% ERV growth was offset by a 14bps rise in valuation yields plus two
specific factors. This includes the impact of the increase in business rates
at Piccadilly Lights we highlighted at the half year, plus the impact of a
rise in build cost, mostly on development assets. Combined, these two factors
resulted in a 1.6% reduction in overall office-led valuations. The valuation
of our retail-led portfolio was up 4.6%, with 5.8% ERV growth and valuation
yields down marginally. The valuation of our future residential developments
and our residual retail and leisure parks was broadly stable, at 0.1% and 1.0%
respectively.
During the year, we saw a steady pick-up in investment activity in London and
major retail, with growing investor interest in both. The strength in
occupational demand for best-in-class assets and hence positive outlook for
capturing rental growth means yields for such assets continue to look
attractive relative to real interest rates, yet we are mindful that the
renewed volatility in interest rates globally over the last few months could
slow down investor decision making. As customer demand remains robust, we
expect that ERV growth for offices and retail will be around the mid-single
digits this year.
Table 6: Valuation overview
Market value Surplus / (Deficit) Valuation change LFL rental value change(1) Net initial Topped up net initial Equivalent LFL equivalent yield change
yield
yield
yield
£m £m % % % % % bps
West End offices(2) 2,930 29 1.1 7.3 3.9 5.0 5.6 15
City and Southwark offices 1,481 27 1.9 7.2 5.0 5.6 6.2 6
Manchester offices 303 6 2.0 3.3 6.9 6.9 8.2 21
Retail and other(1 2) 1,032 (12) (1.2) 7.6 4.7 4.7 4.8 (14)
Developments 1,273 (57) (4.3) n/a 0.0 0.0 5.7 n/a
Total Office-led 7,019 (7) (0.1) 7.1 4.5 5.3 5.9 14
Shopping centres 2,293 103 4.8 6.5 7.1 7.9 7.7 (7)
Outlets 662 23 3.7 3.7 6.1 6.7 6.7 (19)
Total Retail-led 2,955 126 4.6 5.8 6.6 7.2 7.1 (10)
Developments 318 0 0.1 1.7 4.1 4.5 6.5 n/a
Total Residential-led 318 0 0.1 1.7 4.1 4.5 6.5 n/a
Retail and leisure parks 544 5 1.0 6.1 7.1 7.7 8.2 7
Total Other assets 544 5 1.0 6.1 7.1 7.7 8.2 7
Total Combined Portfolio 10,836 124 1.2 6.4 5.4 6.1 6.3 3
1. Rental value change excludes units materially altered during the period.
2. Includes owner-occupied property.
Growing in a sustainable way
As we grow income and EPS, it is important our growth is sustainable in all
aspects. We target to reduce direct and indirect greenhouse gas emissions by
47% by 2030 vs 2019/20, including all of our Scope 1, 2 and 3 emissions, and
reach net zero by 2040. So far, we have reduced our emissions by 33% vs our
2019/20 baseline. We also target to reduce energy intensity by 52% by 2030 vs
2019/20 and with a 7% reduction over the past twelve months, we have again
made significant progress on this. As such, we remain on track vs our 2030
target, with a 27% reduction vs this baseline so far.
As part of this, we are in the process of introducing AI smart building
technology across 20 of our assets to transform how they are managed and
experienced. The automation and intelligent diagnostics this provides enables
smarter decision-making on energy management, which has led to c. 10%
reduction in energy consumption and energy costs for the eight properties
where this technology is already live.
In 2021, we set out a net zero transition investment plan to ensure all our
assets would meet a Minimum Energy Efficiency Standard of EPC 'B' by 2030. The
cost of this is reflected in our valuations and having finished the first
retro-fit of air source heat pumps during the prior year, we completed the
retro-fit of further air source heat pumps at Palace Street and One New Change
last year. As such, 68% of our overall portfolio is now rated EPC 'B' or
higher, up from 56% in March. In office, 73% of our portfolio is rated EPC 'B'
or higher.
Our pipeline of future developments is tracking a 39% reduction in embodied
carbon vs a typical development, but there is a limit to how much of a further
reduction is economically achievable, as customers and investors are more
focused on energy efficiency in buildings than embodied carbon.
Finally, through our Landsec Futures programme, we continue to improve social
mobility in real estate and tackle issues local to our assets. To date, this
has created career pathways for 22 interns and supported 14 real estate
bursaries. From our 2019/20 baseline, we have so far created £147m of social
value and empowered 19,049 people towards the world of work.
Financial review
Overview
Our performance against our primary objective to deliver sustainable income
and EPS growth has been positive. EPRA earnings are up £8m to £382m despite
the -£7m impact from the sale of QAM, which turned future finance lease
income into a capital receipt on sale. This earlier than expected sale was not
part of our initial plan, so adjusted for the 1.8% EPS impact of this, our
2.2% reported EPRA EPS growth for the year was at the very top end of our c.
2-4% guidance.
This positive result was driven by another year of strong operational
performance, with occupancy up 80bps to a two-decade high of 98.0% and rental
uplifts on relettings and renewals rising to 15%, up from 8% over the prior
year. As such, we delivered 4.6% growth in like-for-like net rental income,
well ahead of our initial c. 3-4% guidance and resulting in a £21m increase
in like-for-like income. Meanwhile, our consistent focus on driving further
efficiencies meant overhead costs were down £11m, or 15%, so our overhead
costs are now at the lowest level in more than 20 years. As a result, our
dividend is up 2.0% to 41.2 pence, comfortably in line with our policy of a
1.2-1.3x dividend cover on an annual basis.
Our successful leasing drove 6.4% ERV growth, so our reversionary potential
continues to grow, and the external valuation of our portfolio was up 1.2%.
The shortfall vs book value on the sale of £705m of low-returning assets
meant IFRS profit before tax was £346m yet NTA per share was up 0.9% for the
year and 2.2% in the second half, which means our total accounting return for
the year was 5.6%.
Customer demand for our best-in-class space remains strong, which is set to
drive further income growth. Supported by our lower cost base and a reduction
in capital employed in development, this consistent top line growth will
increasingly flow through to an acceleration in EPS growth in the near and
medium term.
For FY27, we expect EPRA EPS to be stable vs the 51.4 pence in FY26, in line
with our previous guidance, as underlying growth is offset by the 4% impact of
the full-year effect of the sale of QAM. For FY28, based on current momentum,
we expect EPS to grow by a high single digit percentage, driven by the
lease-up of our current London office pipeline and continuing to capture the
growing reversion in our portfolio. Beyond that, we continue to see the
potential for EPS to grow to c. 62 pence by FY30, implying c. 5% CAGR over the
next four years, c. 80% of which is driven by our current portfolio and
platform.
All this remains underpinned by our clear commitment to retain a strong
balance sheet. We reduced our adjusted net debt by £89m to £4.2bn over the
year, so our LTV is down 60bps to 38.7% and our current net debt / EBITDA is
8.4x. We also decided to move to a structurally lower level of development
activity in the future and are not planning to start any meaningful new
developments for the next c. 18 months. As such, our committed development
exposure is set to reduce to less than 2% of our portfolio value in a few
months' time, down from 8% a year ago. Moreover, as our recent projects start
to produce income, we expect net debt / EBITDA to reduce to below 7x within
the next two years and we expect our LTV to reduce to below 35% over time.
With an average debt maturity of 8.6 years, modest £185m committed
development capex, and no need to refinance any debt until 2028, this means
our capital base remains strong.
Presentation of financial information
The condensed consolidated preliminary financial information is prepared under
UK adopted international accounting standards (IFRSs and IFRICs) where the
Group's interests in joint ventures are shown collectively in the income
statement and balance sheet, and all subsidiaries are consolidated at 100%.
Internally, management reviews the Group's results on a basis that adjusts for
these forms of ownership to present a proportionate share. The Combined
Portfolio, with assets totalling £10.8bn, is an example of this approach,
reflecting our economic interest in our properties regardless of our ownership
structure.
Our key measure of underlying earnings performance is EPRA earnings, which
represents the underlying financial performance of the Group's property rental
business, which is our core operating activity. A full definition of EPRA
earnings is given in the Glossary. This measure is based on the Best Practices
Recommendations of the European Public Real Estate Association (EPRA) which
are metrics widely used across the industry to aid comparability and includes
our proportionate share of joint ventures' earnings. Similarly, EPRA Net
Tangible Assets per share is our primary measure of net asset value.
Measures presented on a proportionate basis are alternative performance
measures as they are not defined under IFRS. This presentation provides
additional information to stakeholders on the activities and performance of
the Group, as it aggregates the results of all the Group's property interests
which under IFRS are required to be presented across a number of line items in
the statutory financial statements. For further details see table 14 in the
Business analysis section.
Income statement
We delivered good progress on our objective to deliver sustainable income and
EPS growth. Net rental income was up £10m, as strong like-for-like growth
across our best-in-class portfolio more than offset the fact that the recovery
of bad/doubtful debt provisions was £9m lower than in the prior period. Net
finance expenses increased in line with the increase in average borrowings,
but this was offset by a reduction in administrative expenses so EPRA earnings
of £382m were £8m ahead of the prior period, despite the £7m impact from
the sale of QAM.
Table 7: Income statement(1)
Year ended Year ended
31 March 2026
31 March 2025
Office-led Retail-led Residential- Other assets Total Office-led Retail-led Residential- Other assets Total Change
led
led
£m £m £m £m £m £m £m £m £m £m £m
Gross rental income(2) 324 255 12 53 644 323 215 12 74 624 20
Net service charge expense - (4) (1) (1) (6) (4) (5) - (2) (11) 5
Net direct property expenditure (29) (40) (4) (4) (77) (26) (37) (2) (8) (73) (4)
Net other operating income (1) - - - (1) 1 - - - 1 (2)
Movement in bad/doubtful debts provisions 1 (1) - 2 2 1 7 1 2 11 (9)
Segment net rental income 295 210 7 50 562 295 180 11 66 552 10
Net administrative expenses (62) (73) 11
EPRA earnings before interest 500 479 21
Net finance expense (118) (105) (13)
EPRA earnings 382 374 8
Capital/other items
Valuation surplus((3)) 122 107 15
Loss on disposals (105) (18) (87)
Impairment charges (3) (26) 23
Fair value movement on derivatives (9) (38) 29
Other (40) (6) (34)
Profit before tax attributable to shareholders of the parent 345 393 (46)
Non-controlling interests 1 - 1
Profit before tax 346 393 (47)
1. Including our proportionate share of subsidiaries and joint ventures, as
explained in the Presentation of financial information above.
2. Includes finance lease interest, after rents payable.
3. Excludes valuation surplus on owner-occupied property which is recognised
within Other comprehensive income.
Net rental income
Our gross rental income was up £20m to £644m, principally driven by
like-for-like growth. This was partly offset by the sale of QAM in December,
which reduced income for the year by £10m and will impact FY27 income by a
further £22m. The principal reason for this is that we received the residual
finance lease income that runs until December 2026 as a capital receipt on
sale, rather than as income across the rest of 2025 and 2026. Still, overall
cash proceeds are effectively the same and the sale released £245m of capital
which effectively generated zero total return, as the value of the building
reduced in line with the receipt of every remaining rental payment until it is
vacated in late 2028.
Gross rental income included £4m of surrender receipts, which was slightly
below the £6m in the prior year. In line with the expectation we set out at
the start of the year, the release of bad and doubtful debt provisions was
down to £2m, as the prior year saw a £5m increase in this figure,
principally related to the recovery of outstanding debts on assets that had
previously been managed externally and we had started to manage in house.
Reflecting the above, our overall net rental income was up £10m to £562m,
yet on a like-for-like basis net rent was up £21m, or 4.6%. This was well
ahead of our initial c. 3-4% guidance for the year and in line with our
increased guidance of c. 4-5% growth at the half year, reflecting our strong
leasing, with increased occupancy, positive uplifts on relettings and
renewals, and growth in turnover income. Our focus on costs meant net service
charge expenses and direct property expenditure were down £1m, even though
top-line income was up £20m. Adjusted for movements in the recovery of bad
and doubtful debt provisions, this meant our gross to net margin improved by
0.6ppt to 87.1%.
As the outlook for customer demand remains positive, reflected in our growing
reversionary potential, we expect like-for-like net rental income to grow by a
further c. 3-5% this financial year. As our office portfolio is 99% full,
like-for-like growth in this part of our portfolio is expected to moderate vs
last year's 6.0%, as capturing reversion is now effectively reliant on lease
events, yet we expect like-for-like growth in retail to remain in the
mid-single digits.
Table 8: Net rental income(1)
£m
Net rental income for the year ended 31 March 2025 552
Gross rental income like-for-like movement in the period(2):
Increase in variable and turnover-based rents 7
Operational performance 7
Total like-for-like gross rental income 14
Like-for-like net service charge expense 6
Like-for-like net direct property expenditure 1
Decrease in surrender premiums received (2)
Developments(2) (2)
Acquisitions since 1 April 2024(2) 32
Disposals since 1 April 2024(2) (30)
Movement in bad/doubtful debts (9)
Net rental income for the year ended 31 March 2026 562
1. Including our proportionate share of subsidiaries and joint ventures, as
explained in the Presentation of financial information above.
2. Gross rental income on a like-for-like basis and the impact of
developments, acquisitions and disposals exclude surrender premiums received.
Net administrative expenses
We reduced net administrative expenses by a further £11m to £62m. This was
well ahead of our guided cost reduction for the year of costs below £70m and,
in fact, already below the target we set a year ago for overhead costs to
reduce to less than £65m by FY27. As a result, our overhead costs are now at
the lowest level in 20 years and down 26% since FY23.
The material reduction in costs principally reflects the benefits of the new
data and tech systems we implemented towards the end of FY25. Over the past
year, we have started to see significant efficiencies across several core
business processes as a result, e.g. by automating the legal lease contract to
billing process, and automating and enhancing internal reporting. The latter
provides us with more detailed insights and financial planning opportunities,
which we expect to drive further value in the future. Linked to this, we also
made several organisational changes. We expect further efficiencies to offset
inflation, hence we expect overhead to remain in the low £60m's, which
equates to c. 55bps of our portfolio value and benchmarks well versus the
wider UK REIT sector.
The reduction in net administrative expenses and improvement in gross to net
margin during the year resulted in a 0.9ppt improvement in our EPRA cost ratio
to 20.8%, although we remain of the view that this is not a measure which is
overly useful in its own right. Assets with long leases to a single tenant
naturally have lower operating costs than more operational assets such as e.g.
residential or shopping centres, yet that does not mean they deliver better
income returns or higher income growth. For us, the only thing which matters
is the overall net income return, as that is what drives value for
shareholders.
Net finance expenses
Net interest costs increased by £13m to £118m, which principally reflects
the higher average level of net debt following the acquisitions of the final
stake of MediaCity and Liverpool ONE in the second half of the prior year. We
expect net debt to reduce over the next 12-18 months due to our planned
capital recycling, but the benefit of this in terms of net finance expense to
be offset by a reduction in capitalised interest following the completion of
our London office developments.
Finance expense movements in Capital/other items include the fair value
movements on derivatives, caps and hedging and which is not included in EPRA
earnings, decreased from a net expense of £39m in the prior period to a net
expense of £9m over the last twelve months. This is predominantly due to the
fair value movements of our interest-rate swaps over the period.
Valuation of investment properties
The independent external valuation of our Combined Portfolio was up 1.2%,
resulting in a £124m increase in value. Our strong leasing activity across
our high-quality assets resulted in 6.4% ERV growth, but the upside from this
was partly offset by some yield softening in offices and two specific factors
related to business rates and build costs in our office-led portfolio, which
reduced the valuation growth across our overall portfolio by 1.1%.
As we highlighted in November, the shortfall vs book value on disposals which
we agreed in the first half and which completed in the second half has moved
from being recorded as a valuation deficit in our half year accounts to a loss
on disposal in our full year accounts. This now also reflects £22m for the
ongoing unwind of the value of QAM, which at the half year was still reflected
as a valuation deficit. These movements are the principal reason losses on
disposals are up £50m since the first half, but are fully offset by the
commensurate increase in valuation surplus, so had no impact on IFRS profit or
net assets.
IFRS profit after tax
Substantially all our activity during the period was covered by UK REIT
legislation, which means our tax charge for the period remained minimal. The
IFRS profit after tax of £344m reflects our growing EPRA earnings and £122m
valuation surplus (excluding surplus on owner-occupied property), partly
offset by one-off other costs described in the section below and the shortfall
vs book value on a number of low-returning assets we sold during the year.
This shortfall is also the principal reason IFRS profit after tax was below
the £396m for the prior year.
Net assets and total accounting return
Including dividends paid, our total accounting return for the year was 5.6%,
compared with 6.4% for the prior year. The main difference was due to the
shortfall vs book value on the sale of a select number of assets which
generated little or no return. The income return on NTA we generated was 5.8%.
After the £303m of dividends paid, EPRA Net Tangible Assets, which reflects
the value of our Combined Portfolio less adjusted net debt, increased to
£6,574m, or 882 pence per share. This was up 0.9% over the year and 2.2%
since September, as growth was partly offset by the sale of £705m of
low-returning assets which came at a cost to NTA of 1.1%, excluding the
regular QAM value unwind. In addition, we recognised £12m of restructuring
and integration costs; wrote off £12m of WIP on a potential future
development opportunity; and made a number of other small adjustments
impacting NTA in respect of certain property provisions totalling £3m.
Table 9: Balance sheet(1)
31 March 2026 31 March 2025
£m £m
Combined Portfolio((2)) 10,836 10,880
Adjusted net debt (4,215) (4,304)
Other net liabilities (47) (46)
EPRA Net Tangible Assets 6,574 6,530
Shortfall of fair value over net investment in finance leases book value 6 8
Other intangible assets 1 2
Excess of fair value over trading properties book value (48) (27)
Fair value of interest-rate swaps 4 1
Net assets, excluding amounts due to non-controlling interests 6,537 6,514
Net assets per share 882p 877p
EPRA Net Tangible Assets per share (diluted) 882p 874p
1. Including our proportionate share of subsidiaries and joint ventures, as
explained in the Presentation of financial information above.
2. Includes owner-occupied property and non-current assets held-for-sale.
Table 10: Movement in EPRA Net Tangible Assets(1)
Diluted per share
£m pence
EPRA Net Tangible Assets at 31 March 2025 6,530 874
EPRA earnings 382 51
Valuation surplus((2)) 124 17
Dividends (303) (41)
Loss on disposals (105) (13)
Movement in own shares (27) (3)
Other (27) (3)
EPRA Net Tangible Assets at 31 March 2026 6,574 882
1. Including our proportionate share of subsidiaries and joint ventures, as
explained in the Presentation of financial information above.
2. Including valuation surplus on owner-occupied property.
Net debt and leverage
Adjusted net debt, which includes our share of JV borrowings, reduced by £89m
to £4,215m during the year. We spent £80m on acquisitions and invested
£486m in capex, including £247m for our on-site development schemes, with
the remainder principally comprising pre-development capex; a number of
accretive smaller projects and leasing capex in retail; and investments in our
office portfolio, including the creation of new Myo flex office space and our
net-zero investment programme. This was partly offset by £684m of disposal
receipts during the year.
We have £185m of committed capex left on our committed developments, of which
£135m is expected to be spent this financial year. As we prioritise
investment in major retail and retaining our balance sheet strength, we do not
intend to commit to any meaningful capital to new developments for the next c.
18 months. Meanwhile, future capex on pre-development assets will be minimal
pending visibility on the potential for public sector support to improve the
return prospects for our residential schemes.
The other key elements behind the reduction in net debt are set out in our
statement of cash flows and note 9 to the financial statements, with the main
movements in adjusted net debt shown below. A reconciliation between net debt
and adjusted net debt is shown in note 13 of the financial statements.
Table 11: Movement in adjusted net debt(1)
£m
Adjusted net debt at 31 March 2025 4,304
Adjusted net cash inflow from operating activities((2)(3)) (303)
Dividends paid 290
Capital expenditure((2)) 486
Acquisitions 80
Disposals((3)) (684)
Other 42
Adjusted net debt at 31 March 2026 4,215
1. Including our proportionate share of subsidiaries and joint ventures, as
explained in the Presentation of financial information above.
2. Adjusted for interest capitalised in relation to properties under
development.
3. Adjusted for movements in deferred consideration amounts during the year.
Our longstanding operating guidelines are to have an LTV within a 25-40%
range, a net debt/EBITDA of less than 8x, and an ICR of at least 3x.
Maintaining our strong capital base remains a key priority for us and we would
expect these levels to be commensurate with AA credit ratings.
In line with our guidance, average net debt/EBITDA increased due to the fact
that our two major on-site developments in London are now at or near the point
of full capital deployment but did not produce any income during the year. As
such, net debt/EBITDA came out at 8.6x for the year, or 8.4x based on the
current position, yet this will reduce meaningfully as these projects now
start to produce income.
As we move to a structurally lower level of development activity in the
future, this means we now expect net debt/EBITDA to reduce below 7x. We expect
to achieve this within the next two years without having to rely on material
disposals given the strong momentum in development leasing and continued
like-for-like income growth. Our LTV reduced 60bps during the year to 38.7%
and we expect this to reduce further to below 35% over time.
Table 12: Net debt and leverage
31 March 2026 31 March 2025
Net debt £4,234m £4,341m
Adjusted net debt(1) £4,215m £4,304m
Interest cover ratio 3.1x 3.6x
Net debt/EBITDA (period-end) 8.4x 8.9x
Net debt/EBITDA (weighted average) 8.6x 7.9x
Group LTV(1) 38.7% 39.3%
1. Including our proportionate share of subsidiaries and joint ventures, as
explained in the Presentation of financial information above.
Financing
Our financial position remains strong. In October, we agreed the first
one-year extension option of the full £2,250m of revolving credit facilities
we signed the prior year. As a result, our overall debt maturity remains long,
at 8.6 years, which is twice as long as the average for the UK REIT sector.
This provides us with clear visibility and underpins the resilience of our
attractive earnings profile. We had £1.3bn of cash and undrawn facilities at
the end of March, providing substantial flexibility, and no need to undertake
any refinancing activity until 2028. Our debt is 89% fixed or hedged and in
line with the guidance for a slight increase we provided at the start of the
year, our average cost of debt was up slightly to 3.6%.
Our gross borrowings of £4,360m are diversified across various sources,
including £2,870m of Medium Term Notes (MTNs), £746m of syndicated and
bilateral bank loans and £744m of commercial paper. Our MTNs and the majority
of bank loans form part of our Security Group, which provides security on a
floating pool of assets valued at £10.4bn. This structure provides
flexibility to include or exclude assets, and an attractive cost of funding.
Our MTNs are currently rated AA and A+ by S&P and Fitch.
Our Security Group has a number of tiered covenants, yet below 65% LTV and
above 1.45x ICR, these involve very limited operational restrictions. A
default only occurs when LTV is more than 100% or the ICR falls below 1.0x.
Our portfolio could withstand a c. 36% fall in value before we reach the 65%
LTV threshold and c. 58% before reaching 100% LTV, whilst our EBITDA could
fall by c. 54% before we reach the 1.45x ICR threshold and c. 68% before
reaching 1.0x ICR.
Table 13: Available facilities(1)
31 March 2026 31 March 2025
£m £m
Medium Term Notes 2,870 2,868
Drawn bank debt 746 778
Outstanding commercial paper 744 750
Cash and available undrawn facilities 1,266 1,101
Total committed credit facilities 2,650 2,590
Weighted average maturity of debt((1)) 8.6 years 9.6 years
Percentage of borrowings fixed or hedged((2)) 89% 91%
Weighted average cost of debt((3)) 3.6% 3.4%
1. Assuming all extensions on the bank facilities are executed,; 8.3 years
excl. the remaining extension on the RCFs.
2. Calculated as fixed rate debt and hedges over gross debt based on the
nominal values of debt and hedges.
3. Including upfront fees amortisation and commitment fees; excluding this the
weighted average cost of debt is 3.4% at 31 March 2026.
Financial summary
Reflecting the actions we have taken in recent years, the outlook for Landsec
remains positive. Customer demand for our best-in-class office and retail
space, which make up 91% of our overall income, remains strong. This
persistent trend supported CAGR in like-for-like net income of 4.0% over the
last four years and as reversion is growing, should continue to support
attractive income growth in the future.
As our overhead cost are down to a 20-year low and capital employed in
low/non-yielding development is down materially, this continued top line
growth will increasingly start to flow through to an acceleration in EPS
growth. We therefore continue to see the potential to deliver c. 5% CAGR in
EPRA EPS over the next four years, including high single digit growth in FY28,
which remains underpinned by our robust capital base, with net debt / EBITDA
expected to reduce to below 7x within the next two years.
Principal risks and uncertainties
Principal risks are identified through regular risk assessments undertaken by
the business, reviewed by the Executive Leadership Team, Audit Committee and
approved by the Board on a biannual basis. Principal risks are also reviewed
by the business and the Board during Landsec's annual strategic planning and
business planning processes, taking account of those that would threaten our
business model, future performance, solvency, liquidity or the Group's
strategic objectives. From these activities, the Group has identified nine
principal risks and uncertainties and has assessed how these are managed
through a combination of strategic risk management, mitigating controls, or
insurance. The Group's approach to the management and mitigation of these
risks is included in the Annual Report. The table below sets out our nine
principal risks, with explanations of changes in the risk profile across the
year.
Landsec's overall risk profile saw a reduction over the year, principally due
to a reduction in development risk. Our speculative London office development
pipeline is set to complete in full by the summer, whilst the schemes we
completed in the second half of the year are already over 50% let. We are not
planning to commit any meaningful capital to new development starts in the
next c. 18 months and customer interest for our current schemes is strong, so
development risk will reduce further in the near future. With only £185m of
committed development capex left to spend, we do not rely on disposals to fund
future commitments, which has reduced our capital allocation risk. Whilst the
global macro environment remains volatile, we have continued to manage our
interest rate risk, such that our weighted average debt maturity is twice as
long as the UK REIT sector average. Also, customer demand across our key
markets remains strong, so overall occupancy is up to a two-decade high and
like-for-like net income continues to grow.
Risk description Change in year
Macroeconomic outlook ó
Changes in the macroeconomic environment result in reduction in demand for Uncertainty around the UK fiscal outlook and the continued elevation of
space or deferral of decisions by retail and office occupiers. Due to the geopolitical tensions persist and are under continuous review, however they
length of build projects, the prevailing economic climate at initiation may be are not currently considered significant enough factors to increase the risk
vastly different from that at completion. score.
Long-term interest rates and higher finance costs will remain a risk area for
our business going forward.
The risk score continues to be within the defined risk appetite
Office occupier market ó
Structural changes in customer expectations leading to changes in demand for The office occupancy market outlook remains positive, supported by robust
office space and the consequent impact on income and asset values. Further, demand in a constrained market focusing on high quality assets in the
the risk encompasses the inability to identify or adapt to changing markets in best-connected locations.
a timely manner.
This is demonstrated through active interest across our two new developments,
and as a result, the net risk is considered to be stable at year-end and
remains within the defined risk appetite.
Retail and hospitality occupier market ó
Structural changes in customer expectations leading to changes in demand for We are mindful that the macroeconomic environment continues to be challenging,
retail or hospitality space and the consequent impact on income and asset with low growth in consumer spending for the wider retail and hospitality
values. market. However, our strategy focuses on the best quality assets in the
strongest locations for which the outlook remains positive.
Our Strategic Plan and Business Plans outline initiatives to invest across our
existing portfolio and continue to grow our like-for-like net rental income,
with the expectation that we will bring the risk within appetite.
Capital allocation ò
Capital allocated to specific assets, sectors or locations does not yield the We continue to review the momentum of capital markets and their impact on our
expected returns i.e. we are not effective in placing capital or recycling. ability to maintain an appropriate pace of capital recycling to support
delivery of our plan.
While geo-political uncertainty is currently considered to be having a
downward impact on investment markets and moderating the pace of execution,
the overall risk has reduced in the period, reflecting a lower requirement to
recycle capital to fund our committed capex.
The residual risk remains within the defined risk appetite.
Development ò
We may be unable to generate expected returns as a result of changes in the This risk is considered to have decreased in consideration of the progress
occupier market for a given asset during the course of the development, or during the year to complete two of our major projects.
cost or time overruns on the scheme.
As the majority of the development costs of our committed schemes is already
fixed, and no new development commitments are planned in the near future, we
have the flexibility to manage the scale and timing of our activity and risk
exposure. As such, it was determined at our interim review to reduce our
appetite for risk in development to cautious/minimalist.
The risk is considered to be within risk appetite.
Information security and cyber threat ñ
Data loss or disruption to business processes, corporate systems or The cyber threat landscape is always evolving, with a significant increase in
building-management systems resulting in a negative reputational, operational, cyber incidents in the UK over the past year as the sophistication and nature
regulatory or financial impact. of ransomware attacks, data breaches and AI-driven scams continue to evolve.
Landsec must remain vigilant, and we continue to focus on investing in
operational strengthening to improve processes and controls in this area.
The net risk remains within the overall Cautious risk appetite alignment for
operational risks.
Health and safety ó
Failure to identify, mitigate or react effectively to major health or safety This year, we successfully maintained our ISO 45001 and BS 9997
incidents, leading to: certifications through independent audits, reflecting our commitment to safety
and compliance.
- Serious injury, illness or loss of life
- Criminal/civil proceedings
Our focus remained on reducing significant occupational-safety risks and
- Loss of stakeholder confidence prioritising fire safety to meet legislative requirements, with a particular
focus on delivering our Building Safety Cases.
- Delays to building projects and access restrictions to our properties
resulting in loss of income
- Inadequate response to regulatory changes The likelihood of a major health, safety or security incident has remained
constant throughout the year and within appetite.
- Reputational impact
People and skills ó
Inability to attract, retain and develop the right people and skills to meet It is considered that this risk has remained stable as we continue to monitor
our strategic objectives, grow enterprise value and meet shareholder engagement and retention risks following the evolution of our strategy and the
expectations. impact of the restructure.
The risk remains within our risk appetite.
Climate-change transition ñ
Climate change risk has two elements: Operational and supply chain challenges affecting the costs of sustainable
resources, and a restructure of our internal team have led to an increase in
- Our near and long-term science-based carbon reduction targets by 2030 and the net risk, which is within our Cautious risk appetite target.
2040 are not met in time or are achieved at a significantly higher cost than
expected, leading to regulatory, reputational and commercial impact.
- Failure to ensure all new developments are net zero in construction and
operation, as defined by the emerging net zero standard for assets, leads to
an inability to service market demand for high-quality assets that meet the
highest sustainability standards.
Financial statements
Income statement Year ended Year ended
31 March 2026
31 March 2025
EPRA earnings Capital and other items Total EPRA earnings Capital and other items Total
Notes £m £m £m £m £m £m
Revenue 5 860 32 892 797 45 842
Costs 6 (393) (79) (472) (352) (77) (429)
467 (47) 420 445 (32) 413
Share of post-tax profit from joint ventures 12 25 27 52 23 14 37
Loss on disposal of investment properties - (103) (103) - (15) (15)
Net surplus on revaluation of investment properties 10 - 96 96 - 91 91
Operating profit 492 (27) 465 468 58 526
Finance income 7 14 - 14 15 - 15
Finance expense 7 (124) (9) (133) (109) (39) (148)
Profit before tax 382 (36) 346 374 19 393
Taxation (2) 3
Profit for the year 344 396
Attributable to:
Shareholders of the parent 343 396
Non-controlling interests 1 -
344 396
Profit per share attributable to shareholders of the parent:
Basic earnings per share 4 46.2p 53.3p
Diluted earnings per share 4 45.9p 53.0p
Statement of comprehensive income Year ended Year ended
31 March 2026
31 March 2025
Total Total
£m £m
Profit for the year 344 396
Items that may be subsequently reclassified to the income statement:
Net surplus on revaluation of owner-occupied property 2 12
Deferred tax charge on owner-occupied property revaluation surplus - (3)
Other comprehensive income for the year 2 9
Total comprehensive income for the year 346 405
Attributable to:
Shareholders of the parent 345 405
Non-controlling interests 1 -
346 405
Balance sheet
2026 2025
Notes £m £m
Non-current assets
Investment properties 10 10,018 10,034
Property, plant and equipment 42 42
Intangible assets 3 3
Net investment in finance leases 20 19
Investments in joint ventures 12 593 551
Trade and other receivables 148 229
Other non-current assets 45 22
Total non-current assets 10,869 10,900
Current assets
Trading properties 11 56 81
Trade and other receivables 491 467
Monies held in restricted accounts and deposits 11 20
Cash and cash equivalents 106 39
Other current assets 7 4
Non-current asset held for sale - 110
Total current assets 671 721
Total assets 11,540 11,621
Current liabilities
Borrowings 14 (746) (752)
Trade and other payables (363) (406)
Provisions 15 (41) (44)
Other current liabilities (18) (6)
Total current liabilities (1,168) (1,208)
Non-current liabilities
Borrowings 14 (3,749) (3,802)
Trade and other payables (40) (44)
Provisions 15 (23) (30)
Other non-current liabilities (22) (5)
Total non-current liabilities (3,834) (3,881)
Total liabilities (5,002) (5,089)
Net assets 6,538 6,532
Equity
Capital and reserves attributable to shareholders
Ordinary shares 80 80
Share premium 320 319
Other reserves 29 30
Merger reserve - -
Retained earnings 6,108 6,085
Equity attributable to shareholders of the parent 6,537 6,514
Equity attributable to non-controlling interests 1 18
Total equity 6,538 6,532
The financial statements on pages 26 to 43 were approved by the Board of
Directors on 13 May 2026 and were signed on its behalf by:
Mark Allan Vanessa Simms
Directors
Statements of changes in equity Attributable to shareholders of the parent
Ordinary shares Share premium Other reserves((1)) Retained earnings Non-controlling interests Total
equity
Total
Notes £m £m £m £m £m £m £m
At 1 April 2024 80 319 23 5,980 6,402 45 6,447
Total comprehensive income for the financial year - - - 405 405 - 405
Transactions with shareholders of the parent:
Share-based payments - - 7 (3) 4 - 4
Dividends paid to shareholders of the parent 8 - - - (297) (297) - (297)
Acquisition of non-controlling interests - - - - - (56) (56)
Total transactions with shareholders of the parent - - 7 (300) (293) (56) (349)
Dividends paid to non-controlling interests - - - - - (1) (1)
Issued share capital - - - - - 12 12
Acquisition of subsidiaries - - - - - 18 18
Total transactions with shareholders - - 7 (300) (293) (27) (320)
At 31 March 2025 80 319 30 6,085 6,514 18 6,532
Total comprehensive income for the financial year - - 2 343 345 1 346
Transfer to revaluation surplus reserve - - 12 (12) - - -
Transactions with shareholders of the parent:
Share-based payments - 1 (15) (3) (17) - (17)
Dividends paid to shareholders of the parent 8 - - - (303) (303) - (303)
Total transactions with shareholders of the parent
Dividends paid to non-controlling interests - - - - - (2) (2)
Recognition of redemption liability((2)) - - - (2) (2) (16) (18)
Total transactions with shareholders - 1 (15) (308) (322) (18) (340)
At 31 March 2026 80 320 29 6,108 6,537 1 6,538
1. Included within other reserves is a revaluation surplus reserve of £14m
pertaining to owner-occupied property.
2. On 8 September 2025, the Group granted a put option to the non-controlling
interest in Liverpool ONE that has been recognised as a redemption liability
at 31 March 2026.
Statements of cash flows
2026 2025
Notes £m £m
Cash flows from operating activities
Net cash generated from operations 9 353 381
Interest received 47 23
Interest paid (180) (144)
Rents paid (13) (12)
Capital expenditure on trading properties (6) (8)
Disposal of trading properties 13 13
Other operating cash flows - 3
Net cash inflow/(outflow) from operating activities 9 214 256
Cash flows from investing activities
Investment property development expenditure (298) (293)
Other investment property related expenditure (147) (163)
Acquisition of investment properties, net of cash acquired (84) (325)
Acquisition of subsidiaries, net of cash acquired - (18)
Disposal of investment properties 734 404
Cash distributions from joint ventures 12 11 12
Net cash inflow/(outflow) from investing activities 216 (383)
Cash flows from financing activities
Net proceeds from new borrowings (net of finance fees) 14 300 963
Net repayment of borrowings 14 (338) (562)
Net cash outflow from derivative financial instruments 14 (16) (6)
Acquisition of own shares (27) -
Proceeds from non-controlling interest share capital issuance - 12
Dividends paid to shareholders of the parent 8 (290) (305)
Dividends paid to non-controlling interests (2) (1)
Decrease/(increase) in monies held in restricted accounts and deposits 9 (14)
Other financing cash flows 1 1
Net cash (outflow)/inflow from financing activities (363) 88
Increase/(decrease) in cash and cash equivalents for the year 67 (39)
Cash and cash equivalents at the beginning of the year 39 78
Cash and cash equivalents at the end of the year 106 39
Notes to the financial statements
1. Basis of preparation and consolidation
Basis of preparation
These financial statements have been prepared on a going concern basis and in
accordance with UK adopted international accounting standards (IFRSs and
IFRICs), and as regards the Parent Company financial statements, as applied in
accordance with the provisions of the Companies Act 2006. The financial
statements have been prepared in Pounds Sterling (rounded to the nearest one
million), which is the presentation currency of the Group (Land Securities
Group PLC and all its subsidiary undertakings), and under the historical cost
convention as modified by the revaluation of investment property, financial
assets at fair value through profit or loss, derivative financial instruments
and pension assets.
The preparation of financial statements in conformity with generally accepted
accounting principles (GAAP) requires the use of estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Although these estimates are based on management's best
knowledge of the amount, event or actions, actual results ultimately may
differ from those estimates.
On 13 May 2026, the consolidated financial statements of the Group and this
preliminary announcement were authorised for issue in accordance with a
resolution of the Directors and will be delivered to the Registrar of
Companies following the Group's Annual General Meeting. Statutory accounts for
the year ended 31 March 2025 have been filed unqualified and do not contain
any statement under Section 498(2) or Section 498(3) of the Companies Act
2006. The annual financial information presented in this preliminary
announcement for the year ended 31 March 2026 is based on, and consistent
with, the financial information in the Group's audited financial statements
for the year ended 31 March 2025. The audit report on these financial
statements is unqualified and did not contain a statement under Section 498(2)
or 498(3) of the Companies Act 2006. This preliminary announcement does not
constitute statutory financial statements of the Group within the meaning of
Section 435 of the Companies Act 2006. While the information included in this
preliminary announcement has been prepared in accordance with the recognition
and measurement criteria of IFRS, this announcement does not itself contain
sufficient information to comply with IFRS.
A copy of the Group's Annual Report for the year ended 31 March 2025 can be
found on the website at landsec.com/investors.
Going concern
Given the impact of international and domestic political and economic events
over the course of the year, the Directors have continued to place additional
focus on the appropriateness of adopting the going concern assumption in
preparing the financial statements for the year ended 31 March 2026. The
Group's going concern assessment considers changes in the Group's principal
risks (see pages 23-25) and is dependent on a number of factors, including our
financial performance and continued access to borrowing facilities. Access to
our borrowing facilities is dependent on our ability to continue to operate
the Group's secured debt structure within its financial covenants, which are
described in note 14.
In order to satisfy themselves that the Group has adequate resources to
continue as a going concern for the foreseeable future, the Directors have
reviewed the base case, downside and reverse stress test models, as well as a
cash flow model which considers the impact of pessimistic assumptions on the
Group's operating environment (the 'mitigated downside scenario'). This
mitigated downside scenario reflects unfavourable macroeconomic conditions, a
deterioration in our ability to collect rent and service charge from our
customers and removes uncommitted acquisitions, disposals and developments.
The Group's key metrics from the mitigated downside scenario as at the end of
the going concern assessment period, which covers the 16 months to 30
September 2027, are shown below alongside the actual position at 31 March
2026.
Key metrics Mitigated downside scenario
31 March 2026 30 September 2027
Security Group LTV 41.6% 46.6%
Adjusted net debt £4,215m £4,608m
EPRA net tangible assets £6,574m £5,768m
Available financial headroom £1.3bn £0.4bn
In our mitigated downside scenario, the Group has sufficient financial
headroom, with our Security Group LTV ratio remaining less than 65% and
interest cover above 1.45x, for a period of 16 months from the date of
authorisation of these financial statements. Under this scenario, the Security
Group's asset values would need to fall by a further 28% from the sensitised
values forecasted at 30 September 2027 to be non-compliant with the LTV
covenant. This equates to a 36% fall in the value of the Security Group's
assets from the 31 March 2026 values for the LTV to reach 65%. The Directors
consider the likelihood of this occurring over the going concern assessment
period to be remote.
The Security Group also requires earnings before interest of at least £277m
in the full year ending 31 March 2027 and at least £156m in the six month
period ending 30 September 2027 for interest cover to remain above 1.45x in
the mitigated downside scenario, which would ensure compliance with the
Group's covenant through to the end of the going concern assessment period.
Security Group earnings post year end 31 March 2026 are tracking well above
the level required to meet the interest cover covenant for the year ended 31
March 2027. The Directors do not anticipate a reduction in Security Group
earnings over the period ending 30 September 2027 to a level that would result
in a breach of the interest cover covenant.
The Directors have also considered a reverse stress-test scenario which
assumes no further rent will be received, to determine when our available cash
resources would be exhausted. Even under this extreme scenario, although
breaching the interest cover covenant, the Group continues to have sufficient
cash reserves to continue in operation throughout the going concern assessment
period.
Based on these considerations, together with available market information and
the Directors' knowledge and experience of the Group's property portfolio and
markets, the Directors have adopted the going concern basis in preparing these
financial statements for the year ended 31 March 2026.
Basis of consolidation and presentation of results
The consolidated financial statements for the year ended 31 March 2026
incorporate the financial statements of the Company and all its subsidiary
undertakings. Subsidiary undertakings are those entities controlled by the
Company. Control exists where an entity is exposed to variable returns and has
the ability to affect those returns through its power over the investee.
The results of subsidiaries and joint ventures acquired or disposed of during
the year are included from the effective date of acquisition or to the
effective date of disposal. Accounting policies of subsidiaries and joint
ventures which differ from Group accounting policies are adjusted on
consolidation.
Where instruments in a subsidiary held by third parties are redeemable at the
option of the holder, these interests are classified as a financial liability,
called the redemption liability. The liability is carried at fair value; the
value is reassessed at the balance sheet date and movements are recognised in
the statement of changes in equity or the income statement. Movements are
recognised in the statement of changes in equity if the option holder holds a
non-controlling interest.
Where equity in a subsidiary is not attributable, directly or indirectly, to
the shareholders of the parent, this is classified as a non-controlling
interest. Total comprehensive income or loss and the total equity of the Group
are attributed to the shareholders of the parent and to the non-controlling
interests according to their respective ownership percentages. When the
proportion of equity held by the non-controlling interest changes, the Group
will adjust the carrying amounts of equity attributable to the shareholders of
the parent and non-controlling interest to reflect the changes in their
relative interests in the subsidiary. The Group shall recognise directly in
equity any difference between the amount by which the non-controlling interest
is adjusted and the fair value of the consideration paid or received, and
attribute it to the shareholders of the parent.
Intra-group balances and any unrealised gains and losses arising from
intra-group transactions are eliminated in preparing the consolidated
financial statements. Unrealised gains arising from transactions with joint
ventures are eliminated to the extent of the Group's interest in the joint
venture concerned. Unrealised losses are eliminated in the same way, but only
to the extent that there is no evidence of impairment.
Our property portfolio is a combination of properties that are wholly owned by
the Group, part owned through joint arrangements and properties owned by the
Group but where a third party holds a non-controlling interest. Internally,
management review the results of the Group on a basis that adjusts for these
different forms of ownership to present a proportionate share. The Combined
Portfolio, with assets totalling £10.8bn, is an example of this approach,
reflecting the economic interest we have in our properties regardless of our
ownership structure. The Combined Portfolio comprises the investment
properties, owner-occupied property and non-current assets held for sale of
the Group's subsidiaries, on a proportionately consolidated basis when not
wholly owned, together with our share of investment properties held in our
joint ventures. We consider this presentation provides further understanding
to stakeholders of the activities and performance of the Group, as it
aggregates the results of all of the Group's property interests which under
IFRS are required to be presented across a number of line items in the
statutory financial statements.
The same principle is applied to many of the other measures we discuss and,
accordingly, a number of our financial measures include the results of our
joint ventures and subsidiaries on a proportionate basis. Measures that are
described as being presented on a proportionate basis include the Group's
share of joint ventures on a line-by-line basis and are adjusted to exclude
the non-owned elements of our subsidiaries. This is in contrast to the Group's
statutory financial statements, where the Group's interest in joint ventures
is presented as one line on the income statement and balance sheet, and all
subsidiaries are consolidated at 100% with any non-owned element being
adjusted as a non-controlling interest or redemption liability, as
appropriate. Our joint operations are presented on a proportionate basis in
all financial measures.
EPRA earnings is an alternative performance measure and is the Group's
alternative measure of the underlying pre-tax profit of the property rental
business. EPRA earnings excludes all items of a capital nature, such as
valuation movements and profits and losses on the disposal of investment
properties, as well as exceptional items. The Group believes that EPRA
earnings provides additional understanding of the Group's operational
performance to shareholders and other stakeholder groups. A full definition of
EPRA earnings is given in the Glossary. The components of EPRA earnings are
presented on a proportionate basis in note 3.
2. Changes in accounting policies and standards
The accounting policies used in these financial statements are consistent with
those applied in the last annual financial statements, as amended where
relevant to reflect the adoption of new standards, amendments and
interpretations which became effective in the year as listed below:
- Amendments to IAS 21 - Lack of exchangeability
There has been no material impact on the financial statements of adopting any
new standards, amendments and interpretations.
Amendments to IFRS
A number of new standards, amendments to standards and interpretations have
been issued but are not yet effective for the Group as listed below:
- IFRS 18 - Presentation and Disclosure in Financial Statements
- IFRS 19 Subsidiaries without Public Accountability: Disclosures
- Amendments to IFRS 7 and IFRS 9 - Classification and measurement of
financial instruments and for contracts referencing nature-dependent
electricity
- Annual Improvements to IFRS Accounting Standards (Volume 11)
The Group has yet to assess the full outcome of these new standards,
amendments and interpretations, however with the exception of IFRS 18 these
other new standards, amendments and interpretations are not expected to have a
significant impact on the Group's financial statements. The Group intends to
adopt these new standards, amendments and interpretations, if applicable, when
they become effective.
3. Segmental information
The Group's operations are all in the UK and are managed across four operating
segments, being Office-led, Retail-led, Residential-led and Other assets.
The Office-led segment includes all operating or under development office
assets in London and the regions as well as the associated retail and other
premises in proximity to these assets. The Retail-led segment includes all the
shopping centres and outlets in our portfolio. The Residential-led segment
includes our residential developments and the Other assets segment mainly
includes assets that will not be a focus for capital investment and consists
of our retail and leisure park assets.
In previous financial periods, our segmental reporting reflected that our
operations were organised into Central London, Major retail destinations
(Major retail), Mixed-use urban neighbourhoods (Mixed-use urban) and Subscale
sectors. As noted in the Group's Annual Report for the year ended 31 March
2025, the Group has aligned its financial reporting to reflect its updated
strategy and operating model and consequently, comparatives have been
restated.
Management has determined the Group's operating segments based on the
information reviewed by Senior Management to make strategic decisions. The
chief operating decision maker is the Executive Leadership Team (ELT),
comprising the Executive Directors and the Managing Directors. The information
presented to ELT includes reports from all functions of the business as well
as strategy, financial planning, succession planning, organisational
development and Group-wide policies.
The Group's primary measure of underlying profit before tax is EPRA earnings.
However, Segment net rental income is the lowest level to which the profit
arising from the ongoing operations of the Group is analysed between the four
segments. The administrative costs, which are predominantly staff costs for
centralised functions, are all treated as administrative expenses and are not
allocated to individual segments.
The Group manages its financing structure, with the exception of joint
ventures and non-wholly owned subsidiaries, on a pooled basis. Individual
joint ventures and non-wholly owned subsidiaries may have specific financing
arrangements in place. Debt facilities and finance expenses, including those
of joint ventures, are managed centrally and are therefore not attributed to a
particular segment. Unallocated income and expenses are items incurred
centrally which are not directly attributable to one of the segments.
All items in the segmental information note are presented on a proportionate
basis.
Segmental results
2026 2025(1)
EPRA earnings Office-led Retail-led Residential-led Other assets Total Office-led Retail-led Residential-led Other assets Total
£m £m £m £m £m £m £m £m £m £m
Rental income 327 264 12 52 655 327 222 12 74 635
Finance lease interest - - - 1 1 - - - 1 1
Gross rental income (before rents payable) 327 264 12 53 656 327 222 12 75 636
Rents payable(2) (3) (9) - - (12) (4) (7) - (1) (12)
Gross rental income (after rents payable) 324 255 12 53 644 323 215 12 74 624
Service charge income((3)) 85 99 5 11 200 77 75 5 8 165
Service charge expense((3)) (85) (103) (6) (12) (206) (81) (80) (5) (10) (176)
Net service charge expense - (4) (1) (1) (6) (4) (5) - (2) (11)
Other property related income 22 8 1 3 34 23 8 2 3 36
Direct property expenditure (51) (48) (5) (7) (111) (49) (45) (4) (11) (109)
Other operating income 22 - - - 22 10 - - - 10
Other operating expense (23) - - - (23) (9) - - - (9)
Movement in bad and doubtful debts provision 1 (1) - 2 2 1 7 1 2 11
Segment net rental income 295 210 7 50 562 295 180 11 66 552
Other income 1 1
Administrative expense (61) (71)
Depreciation (2) (3)
EPRA earnings before interest 500 479
Finance income 14 15
Finance expense (124) (109)
Joint venture net finance expense (8) (11)
EPRA earnings attributable to shareholders of the parent 382 374
Capital/other items (36) 19
Profit before tax 346 393
Taxation (2) 3
Profit for the year 344 396
1. Restated for changes in the Group's operating segments as outlined in the
note narrative above.
2. Included within rents payable is lease interest payable of £7m (2025:
£8m) across the four segments.
3. Current year balances reflect a reclassification of service charge
management fees from service charge expense to service charge income of £11m.
While the comparatives have not been restated, the equivalent reclassification
would have been £8m.
4. Performance measures
In the tables below, we present earnings per share attributable to
shareholders of the parent, calculated in accordance with IFRS, and net assets
per share attributable to shareholders of the parent together with certain
measures defined by the European Public Real Estate Association (EPRA), which
have been included to assist comparison between European property companies.
Three of the Group's key financial performance measures are EPRA earnings per
share, EPRA Net Tangible Assets per share and Total accounting return. Refer
to table 14 in the Business Analysis section for further details on these
alternative performance measures.
EPRA earnings, which is a tax adjusted measure of underlying earnings, is the
basis for the calculation of EPRA earnings per share. We believe EPRA earnings
and EPRA earnings per share provide further insight into the results of the
Group's operational performance to stakeholders as they focus on the rental
income performance of the business and exclude Capital and other items which
can vary significantly from year to year.
Earnings per share Year ended Year ended
31 March 2026
31 March 2025
Profit for the year EPRA earnings Profit for the year EPRA earnings
£m £m £m £m
Profit attributable to shareholders of the parent 343 343 396 396
Valuation and loss on disposals((1)) - (17) - (84)
Net finance expense (excluded from EPRA earnings) - 9 - 39
Impairment of goodwill - - - 22
Taxation - 2 - (3)
Net development contract and transaction expenditure - 30 - (3)
Restructuring, integration and other costs - 15 - 7
Profit used in per share calculation 343 382 396 374
IFRS EPRA IFRS EPRA
Basic earnings per share 46.2p 51.4p 53.3p 50.3p
Diluted earnings per share 45.9p 51.1p 53.0p 50.1p
1. Whilst the Group's accounting policy is to recognise the profit/(loss) on
disposal of investment properties with reference to the asset's carrying
amount at the beginning of the accounting period, £22m of the balance
pertains to revaluation movements arising from rental income received from 1
April 2025 to the date of disposal on the Queen Anne's Mansions office block.
Net assets per share 31 March 2026 31 March 2025
Net assets EPRA NDV EPRA NTA Net assets EPRA NDV EPRA NTA
£m £m £m £m £m £m
Net assets attributable to shareholders of the parent 6,537 6,537 6,537 6,514 6,514 6,514
Shortfall of fair value over net investment in finance leases book value - (6) (6) - (8) (8)
Other intangible asset - - (1) - - (2)
Fair value of interest-rate swaps - - (4) - - (1)
Excess of fair value of trading properties over book value - 48 48 - 27 27
Shortfall of fair value of debt over book value (note 14) - 359 - - 334 -
Net assets used in per share calculation 6,537 6,938 6,574 6,514 6,867 6,530
IFRS EPRA NDV EPRA NTA IFRS EPRA NDV EPRA NTA
Net assets per share 882p n/a n/a 877p n/a n/a
Diluted net assets per share 877p 931p 882p 872p 919p 874p
Number of shares 2026 2025
Weighted average 31 March Weighted average 31 March
million million million million
Ordinary shares 752 752 752 752
Treasury shares (7) (7) (7) (7)
Own shares (2) (4) (2) (2)
Number of shares - basic 743 741 743 743
Dilutive effect of share options 4 4 4 4
Number of shares - diluted 747 745 747 747
Total accounting return is calculated as the cash dividends per share paid in
the year plus the change in EPRA NTA per share, divided by the opening EPRA
NTA per share. We consider this to be a useful measure for shareholders as it
gives an indication of the total accounting return over the year.
Total accounting return based on EPRA NTA Year ended Year ended
31 March 2026
31 March 2025
Pence Pence
Increase in EPRA NTA per share 8 15
Dividend paid per share in the year (note 8) 41 40
Total return (a) 49 55
EPRA NTA per share at the beginning of the year (b) 874 859
Total accounting return (a/b) 5.6% 6.4%
5. Revenue
All revenue is classified within the 'EPRA earnings' column of the income
statement, with the exception of proceeds from the sale of trading properties,
income from development contracts or transactions and the non-owned element of
the Group's subsidiaries which are presented in the 'Capital and other items'
column.
2026 2025
EPRA earnings Capital and other items Total EPRA earnings Capital and other items Total
£m £m £m £m £m £m
Rental income (excluding adjustment for lease incentives) 593 2 595 563 4 567
Adjustment for lease incentives 23 - 23 33 - 33
Rental income 616 2 618 596 4 600
Service charge income((1)) 190 - 190 154 1 155
Trading property sales proceeds - 30 30 - 22 22
Other property related income 30 - 30 34 1 35
Finance lease interest 1 - 1 1 - 1
Development contract and transaction income - - - - 17 17
Other operating income 22 - 22 10 - 10
Other income 1 - 1 2 - 2
Revenue per the income statement 860 32 892 797 45 842
The following table reconciles revenue per the income statement to the
individual components of revenue presented in note 3.
2026 2025
Group Joint ventures Adjustment for non-wholly owned subsidiaries Total Group Joint Adjustment Total
ventures
for non- wholly owned subsidiaries
£m £m £m £m £m £m £m £m
Rental income 618 39 (2) 655 600 39 (4) 635
Service charge income((1)) 190 10 - 200 155 11 (1) 165
Other property related income 30 4 - 34 35 2 (1) 36
Finance lease interest 1 - - 1 1 - - 1
Other operating income 22 - - 22 10 - - 10
Other income 1 - - 1 2 - (1) 1
Revenue in the segmental information note 862 53 (2) 913 803 52 (7) 848
Development contract and transaction income - - - - 17 - - 17
Trading property sales proceeds 30 - - 30 22 - - 22
Revenue including Capital and other items 892 53 (2) 943 842 52 (7) 887
1. Current year balances reflect a reclassification of service charge
management fees from service charge expense to service charge income of £11m.
While the comparatives have not been restated, the equivalent reclassification
would have been £8m.
6. Costs
All costs are classified within the 'EPRA earnings' column of the income
statement, with the exception of the cost of sale of trading properties, costs
arising on development contracts or transactions, amortisation and impairments
of intangible assets, and other attributable costs, arising on business
combinations and the non-owned element of the Group's subsidiaries which are
presented in the 'Capital and other items' column.
2026 2025
EPRA earnings Capital and other items Total EPRA earnings Capital and other items Total
£m £m £m £m £m £m
Rents payable 11 - 11 11 - 11
Service charge expense((1)) 194 - 194 164 1 165
Direct property expenditure 104 - 104 103 1 104
Movement in bad and doubtful debts provision (2) - (2) (9) - (9)
Administrative expenses 61 2 63 71 - 71
Impairment of trading properties - 3 3 - 4 4
Cost of trading property disposals - 31 31 - 28 28
Development contract and transaction expenditure - 30 30 - 14 14
Depreciation, including amortisation of software 2 1 3 3 1 4
Reversal of impairment of amounts due from joint ventures - - - - (1) (1)
Impairment of goodwill - - - - 22 22
Fair value gain on remeasurement of investment - (2) (2) - - -
Other operating expense 23 - 23 9 - 9
Restructuring, integration and other costs - 14 14 - 7 7
Total costs per the income statement 393 79 472 352 77 429
The following table reconciles costs per the income statement to the
individual components of costs presented in note 3.
2026 2025
Group Joint ventures Adjustment for non-wholly owned subsidiaries Total Group Joint Adjustment Total
ventures
for non-wholly owned subsidiaries
£m £m £m £m £m £m £m £m
Rents payable 11 1 - 12 11 1 - 12
Service charge expense((1)) 194 13 (1) 206 165 12 (1) 176
Direct property expenditure 104 7 - 111 104 6 (1) 109
Administrative expenses 61 - - 61 71 - - 71
Depreciation, including amortisation of software 2 - - 2 3 - - 3
Movement in bad and doubtful debts provision (2) - - (2) (9) (2) - (11)
Other operating expense 23 - - 23 9 - - 9
Costs in the segmental information note 393 21 (1) 413 354 17 (2) 369
Impairment of trading properties 3 - - 3 4 - - 4
Cost of trading property disposals 31 - - 31 28 - - 28
Administrative expenses 2 - - 2 - - - -
Development contract and transaction expenditure 30 - - 30 14 2 - 16
Depreciation 1 - - 1 1 - - 1
Reversal of impairment of amounts due from joint ventures - - - - (1) - - (1)
Fair value gain on remeasurement of investment (2) - - (2) - - - -
Impairment of goodwill - - - - 22 - - 22
Restructuring, integration and other costs 14 - - 14 7 - - 7
Costs including Capital and other items 472 21 (1) 492 429 19 (2) 446
1. Current year balances reflect a reclassification of service charge
management fees from service charge expense to service charge income of £11m.
While the comparatives have not been restated, the equivalent reclassification
would have been £8m.
7. Net finance expense
2026 2025
EPRA earnings Capital and other items Total EPRA earnings Capital and other items Total
£m £m £m £m £m £m
Finance income
Interest receivable from joint ventures 9 - 9 11 - 11
Other interest receivable 5 - 5 4 - 4
14 - 14 15 - 15
Finance expense
Bond and debenture debt (105) - (105) (101) - (101)
Bank and other short-term borrowings (59) - (59) (36) (5) (41)
Fair value movement on derivatives - (9) (9) - (34) (34)
Other interest payable (2) - (2) - - -
(166) (9) (175) (137) (39) (176)
Interest capitalised in relation to properties under development 42 - 42 28 - 28
(124) (9) (133) (109) (39) (148)
Net finance expense (110) (9) (119) (94) (39) (133)
Joint venture net finance expense (8) (11)
Net finance expense included in EPRA earnings (118) (105)
Lease interest payable of £7m (2025: £8m) is included within rents payable
as detailed in note 3.
8. Dividends
Dividends paid Year ended 31 March
Pence per share 2026 2025
Payment date PID Non-PID Total £m £m
For the year ended 31 March 2024:
Third interim 12 April 2024 9.30 - 9.30 69
Final 26 July 2024 12.10 - 12.10 90
For the year ended 31 March 2025:
First interim 4 October 2024 9.20 - 9.20 68
Second interim 8 January 2025 - 9.40 9.40 70
Third interim 11 April 2025 9.50 - 9.50 71
Final 25 July 2025 12.30 - 12.30 91
For the year ended 31 March 2026:
Interim 9 January 2026 13.60 5.40 19.00 141
Gross dividends 303 297
Dividends in the statement of changes in equity 303 297
Timing difference on payment of withholding tax (13) 8
Dividends in the statement of cash flows 290 305
The Board has recommended a final dividend for the year ended 31 March 2026 of
22.2p per ordinary share (2025: 12.3p) to be paid as a PID. This final
dividend will result in a further estimated distribution of £164m (2025:
£92m). Subject to shareholders' approval at the Annual General Meeting, the
final dividend will be paid on 24 July 2026 to shareholders registered at the
close of business on 19 June 2026.
The total dividend paid and recommended in respect of the year ended 31 March
2026 is 41.2p per ordinary share (2025: 40.4p) resulting in a total estimated
distribution of £305m (2025: £301m).
For the year ending 31 March 2027, the Group will pay two half-yearly
dividends, likely to be in January 2027 and July 2027.
A Dividend Reinvestment Plan (DRIP) has been available in respect of all
dividends paid during the year. The last day for DRIP elections for the final
dividend is close of business on 3 July 2026.
9. Net cash generated from operations
Reconciliation of operating profit to net cash generated from operations
2026 2025
£m £m
Operating profit 465 526
Adjustments for:
Net surplus on revaluation of investment properties (96) (91)
Loss on disposal of trading properties 1 6
Loss on disposal of investment properties 103 15
Share of profit from joint ventures (52) (37)
Share-based payment charge 9 6
Impairment of goodwill - 22
Reversal of amounts due from joint ventures - (1)
Non-cash development contract and transaction expenditure 29 1
Rents payable 11 11
Depreciation and amortisation 2 4
Fair value gain on remeasurement of investment (2) -
Impairment of trading properties 3 4
Non-cash restructuring, integration and other costs 7 -
480 466
Changes in working capital:
Increase in receivables (56) (128)
(Decrease)/increase in payables and provisions (71) 43
Net cash generated from operations 353 381
Reconciliation to adjusted net cash inflow from operating activities
2026 2025
£m £m
Net cash inflow from operating activities 214 256
Joint ventures net cash inflow from operating activities 6 4
Adjusted net cash inflow from operating activities(1) 220 260
1. Includes cash flows relating to the interest in Liverpool ONE which is not
owned by the Group but is consolidated in the Group numbers.
10. Investment properties
2026 2025
£m £m
Net book value at the beginning of the year 10,034 9,330
Acquisitions of investment properties(1) 75 642
Capital expenditure 443 473
Capitalised interest 41 27
Net movement in head leases capitalised(2) (2) 86
Disposals(3)(4) (669) (479)
Net surplus on revaluation of investment properties((4)) 96 91
Transfer to property, plant and equipment - (26)
Transfer to assets held for sale - (110)
Net book value at the end of the year 10,018 10,034
1. Adjusted downward by £17m of transaction and contract related provisions
utilised in the year (see note 15).
2. See note 14 for details of the amounts payable under head leases and note 3
for details of the rents payable in the income statement.
3. Includes impact of disposals of finance leases.
4. Whilst the Group's accounting policy is to recognise the profit/(loss) on
disposal of investment properties with reference to the asset's carrying
amount at the beginning of the accounting period, £22m of the balance
pertains to revaluation movements arising from rental income received from 1
April 2025 to the date of disposal on the Queen Anne's Mansions office block.
The market value of the Group's investment properties, as determined by the
Group's external valuers, differs from the net book value presented in the
balance sheet due to the Group presenting tenant finance leases, head leases
and lease incentives separately. The following table reconciles the net book
value of the investment properties to the market value.
2026 2025
Group Joint ventures Adjustment for non-wholly owned subsidiaries Combined Portfolio Group Joint Adjustment Combined Portfolio
ventures(1)
for non-
wholly owned subsidiaries
£m £m £m £m £m £m £m £m
Market value 10,154 661 (20) 10,795 10,125 636 (33) 10,728
Less: properties treated as finance leases (13) - - (13) (12) - - (12)
Plus: head leases capitalised 135 1 - 136 158 1 - 159
Less: tenant lease incentives (258) (26) - (284) (237) (29) - (266)
Net book value 10,018 636 (20) 10,634 10,034 608 (33) 10,609
Net surplus/(deficit) on revaluation of investment properties 96 27 (1) 122 91 13 3 107
The net book value of leasehold properties where head leases have been
capitalised is £1,438m (2025: £1,761m).
Investment properties include capitalised interest of £358m (2025: £317m).
The average rate of interest capitalisation for the year is 4.7% (2025: 4.8%).
The gross historical cost of investment properties is £8,941m (2025:
£9,136m).
11. Trading properties
Development land and infrastructure Residential Total
£m £m £m
At 1 April 2024 72 28 100
Acquisitions 10 - 10
Capital expenditure 5 6 11
Capitalised interest - 1 1
Disposals (19) (7) (26)
Impairment provision (4) - (4)
Transfer to development contract and transaction expenditure (11) - (11)
At 31 March 2025 53 28 81
Capital expenditure 4 3 7
Capitalised interest - 1 1
Disposals - (30) (30)
Impairment provision (3) - (3)
At 31 March 2026 54 2 56
The cumulative impairment provision at 31 March 2026 in respect of Development
land and infrastructure was £34m (2025: £31m); and in respect of Residential
was £nil (2025: £nil).
12. Joint arrangements
The Group's principal joint arrangements are described below:
Joint ventures Percentage owned & voting rights(1) Business Year end date(2) Joint venture partner
segment
Held at 31 March 2026
Nova, Victoria(3) 50% Office-led 31 March Suntec Real Estate Investment Trust
Southside Limited Partnership 50% Retail-led 31 March Invesco Real Estate European Fund
Westgate Oxford Alliance Limited Partnership 50% Retail-led 31 March The Crown Estate Commissioners
Harvest(4)(6) 50% Other assets 31 March J Sainsbury plc
The Ebbsfleet Limited Partnership(6) 50% Other assets 31 March Ebbsfleet Property Limited
West India Quay Unit Trust(6) 50% Other assets 31 March Schroder UK Real Estate Fund
Mayfield(5)(6) 50% Residential-led 31 March LCR Limited, Manchester City Council, Transport for Greater Manchester
Curzon Park Limited(6) 50% Other assets 31 March Derwent Developments (Curzon) Limited
Landmark Court Partnership Limited(6) 51% Office-led 31 March TTL Landmark Court Properties Limited
Opportunities for Sittingbourne Limited(6) 50% Other assets 31 March Swale Borough Council
Cathedral (Movement, Greenwich) LLP(6) 52% Other assets 31 March Mr Richard Upton
Circus Street Developments Limited(6) 50% Other assets 31 March High Wire Brighton Limited
Joint operation Ownership interest Business Year end date(2) Joint operation partners
segment
Held at 31 March 2026
Bluewater, Kent 64% Retail-led 31 March M&G Real Estate,
Royal London Asset Management,
Schroders Capital Real Estate
1. Investments under joint arrangements are not always represented by an equal
percentage holding by each partner. In a number of joint ventures that are not
considered principal joint ventures and therefore not included in the table
above, the Group holds a majority shareholding but has joint control and
therefore the arrangement is accounted for as a joint venture.
2. The year end date shown is the accounting reference date of the joint
arrangement. In all cases, the Group's accounting is performed using financial
information for the Group's own reporting year and reporting date.
3. Nova, Victoria includes the Nova Limited Partnership, Nova Residential
Limited Partnership, Nova GP Limited, Nova Business Manager Limited, Nova
Residential (GP) Limited, Nova Residential Intermediate Limited, Nova Estate
Management Company Limited, Nova Nominee 1 Limited and Nova Nominee 2 Limited.
4. Harvest includes Harvest 2 Limited Partnership, Harvest Development
Management Limited, Harvest 2 Selly Oak Limited, Harvest 2 GP Limited and
Harvest GP Limited.
5. Mayfield includes Mayfield Development Partnership LP and Mayfield
Development (General Partner) Limited.
6. Included within Other in subsequent tables.
All of the Group's joint arrangements listed above have their principal place
of business in the United Kingdom. All of the Group's principal joint
arrangements own and operate investment property, with the exception of:
- The Ebbsfleet Limited Partnership , which is a holding company;
- Harvest, which is engaged in long-term development contracts; and
- Curzon Park Limited, Landmark Court Partnership Limited, Opportunities
for Sittingbourne Limited and Circus Street Developments Limited, which were
previously or are companies continuing their business of property development.
The activities of all the Group's principal joint arrangements are therefore
strategically important to the business activities of the Group.
All joint ventures listed above are registered in England and Wales with the
exception of Southside Limited Partnership and West India Quay Unit Trust
which are registered in Jersey.
Joint ventures Nova, Southside Westgate Other Total
Limited Partnership
Victoria Oxford
Alliance Partnership
Net investment Group share Group share Group share Group share Group share
£m £m £m £m £m
At 1 April 2024 344 (5) 121 61 521
Total comprehensive income 20 3 12 2 37
Cash and other distributions - - (11) (1) (12)
Other non-cash movements 1 (1) (2) 4 2
At 31 March 2025 365 (3) 120 66 548
Total comprehensive income 28 3 14 7 52
Cash and other distributions - - (11) - (11)
Other non-cash movements 2 - - 2 4
At 31 March 2026 395 - 123 75 593
Comprised of:
At 31 March 2025
Non-current assets 365 - 120 66 551
Non-current liabilities(1) - (3) - - (3)
At 31 March 2026
Non-current assets 395 - 123 75 593
Non-current liabilities(1) - - - - -
1. The Group's share of accumulated losses of a joint venture interest are
recognised as net liabilities where there is an obligation to provide for
these losses.
13. Capital structure
2026 2025
Group Joint ventures Adjustment for non-wholly owned subsidiaries Combined Group Joint ventures Adjustment for non-wholly owned subsidiaries Combined
£m £m £m £m £m £m £m £m
Property portfolio
Market value of non-current property assets((1)) 10,195 661 (20) 10,836 10,277 636 (33) 10,880
Carrying value of trading properties 56 - - 56 81 - - 81
Total property portfolio (a) 10,251 661 (20) 10,892 10,358 636 (33) 10,961
Net debt
Borrowings 4,360 - - 4,360 4,396 - (15) 4,381
Monies held in restricted accounts and deposits (11) - - (11) (20) - 1 (19)
Cash and cash equivalents (106) (25) 1 (130) (39) (24) - (63)
Fair value of interest-rate swaps (5) - - (5) (1) - - (1)
Fair value of foreign exchange swaps and forwards (4) - - (4) 5 - - 5
Net debt (b) 4,234 (25) 1 4,210 4,341 (24) (14) 4,303
Add: Fair value of interest-rate swaps 5 - - 5 1 - - 1
Adjusted net debt (c) 4,239 (25) 1 4,215 4,342 (24) (14) 4,304
Adjusted total equity
Total equity (d) 6,538 - (1) 6,537 6,532 - (18) 6,514
Fair value of interest-rate swaps (5) - - (5) (1) - - (1)
Adjusted total equity (e) 6,533 - (1) 6,532 6,531 - (18) 6,513
Gearing (b/d) 64.8% 64.4% 66.5% 66.1%
Adjusted gearing (c/e) 64.9% 64.5% 66.5% 66.1%
Group LTV (c/a) 41.4% 38.7% 41.9% 39.3%
EPRA LTV(2) 40.4% 41.0%
Security Group LTV 41.6% - 41.9%
Weighted average cost of debt 3.6% 3.6% 3.4% 3.4%
1. Includes owner-occupied property and non-current assets held-for-sale.
2. EPRA LTV differs from Group LTV as it includes net payables and receivables
and includes trading properties at fair value and debt instruments at nominal
value rather than book value. Group LTV remains our core performance measure.
14. Borrowings
2026 2025
Secured/ Fixed/ Effective Nominal/ notional value Fair Book value Nominal/ notional value Fair Book value
unsecured
floating
interest rate
value
value
£m
£m £m
£m
% £m £m
Current borrowings
Commercial paper
Sterling Unsecured Floating Various((1)) 228 228 228 270 270 270
Euro Unsecured Floating Various((1)) 270 270 270 310 310 310
US Dollar Unsecured Floating Various((1)) 246 246 246 170 170 170
Total current borrowings 744 744 744 750 750 750
Amounts payable under head leases 2 2 2 2 2 2
Total current borrowings including amounts payable under head leases
746 746 746 752 752 752
Non-current borrowings
Medium term notes (MTN)
A16 2.375% MTN due 2029 Secured Fixed 2.5 350 340 350 350 333 349
A6 5.376% MTN due 2029 Secured Fixed 5.4 65 65 65 65 65 65
A13 2.399% MTN due 2031 Secured Fixed 2.4 300 278 300 300 274 300
A7 5.396% MTN due 2032 Secured Fixed 5.4 77 77 77 77 78 77
A18 4.750% MTN due 2033 Secured Fixed 4.9 300 293 297 300 294 295
A17 4.875% MTN due 2034 Secured Fixed 5.0 400 391 395 400 393 396
A11 5.125% MTN due 2036 Secured Fixed 5.1 50 48 50 50 47 50
A19 4.625% MTN due 2036 Secured Fixed 4.9 350 328 346 350 330 346
A14 2.625% MTN due 2039 Secured Fixed 2.6 500 367 495 500 371 495
A15 2.750% MTN due 2059 Secured Fixed 2.7 500 255 495 500 275 495
2,892 2,442 2,870 2,892 2,460 2,868
Syndicated and bilateral bank debt Secured Floating SONIA + margin 746 746 746 778 778 778
Total non-current borrowings 3,638 3,188 3,616 3,670 3,238 3,646
Amounts payable under head leases Unsecured Fixed 5.2 133 202 133 156 230 156
Total non-current borrowings including amounts payable under head leases
3,771 3,390 3,749 3,826 3,468 3,802
Total borrowing including amounts payable under head leases
4,517 4,136 4,495 4,578 4,220 4,554
Total borrowings excluding amounts payable under head leases
4,382 3,932 4,360 4,420 3,988 4,396
1. Non-Sterling commercial paper is immediately swapped into Sterling. The
interest rate is fixed at the time of the issuance for the duration and tracks
SONIA swap rates.
Reconciliation of movements in liabilities arising from financing activities 2026
Non-cash changes
At the beginning of the year Cash flows Foreign exchange movements Other changes in fair values Other changes At the end
of the year
£m £m £m £m £m £m
Borrowings 4,554 (38) 2 - (23) 4,495
Derivative financial instruments 4 (16) (2) 11 (6) (9)
Redemption liability - - - - 18 18
4,558 (54) - 11 (11) 4,504
2025
Borrowings 3,780 401 2 (10) 381 4,554
Derivative financial instruments (25) (6) 11 23 1 4
3,755 395 13 13 382 4,558
The MTNs are secured on the fixed and floating pool of assets of the Security
Group. The Security Group includes wholly owned investment properties,
development properties and a number of the Group's investment in other assets,
in total valued at £10.4bn at 31 March 2026 (2025: £10.0bn). The secured
debt structure has a tiered operating covenant regime which gives the Group
substantial flexibility when the loan-to-value and interest cover in the
Security Group are less than 65% and more than 1.45x respectively. If these
limits are exceeded, the operating environment becomes more restrictive with
provisions to encourage a reduction in gearing. The interest rate of each MTN
is fixed until the expected maturity, being two years before the legal
maturity date of the MTN. The interest rate for the last two years may either
become floating on a SONIA basis plus an increased margin (relative to that at
the time of issue), or subject to a fixed coupon uplift, depending on the
terms and conditions of the specific notes.
The effective interest rate is based on the coupon paid and includes the
amortisation of issue costs and discount to redemption value. The MTNs are
listed on the Irish Stock Exchange and their fair values are based on their
respective market prices.
Syndicated and bilateral bank debt Authorised Drawn Undrawn
Maturity as at 2026 2025 2026 2025 2026 2025
31 March 2026
£m £m £m £m £m £m
Syndicated debt 2027-30 2,550 2,490 746 778 1,804 1,712
Bilateral debt 2026 100 100 - - 100 100
2,650 2,590 746 778 1,904 1,812
On 2 May 2025, the Group put in place a new £300m bank facility with a final
maturity of November 2027. On 13 October 2025, the Group exercised extension
options on the existing syndicated facilities extending maturity dates to 2028
and 2030 on the same terms. During the year ended 31 March 2026, the amounts
drawn under the Group's facilities decreased by £32m. At 31 March 2026, the
Group's committed facilities totalled £2,650m (2025: £2,590m). All the
committed syndicated and bilateral facilities are secured on the assets of the
Security Group.
The terms of the Security Group funding arrangements require undrawn
facilities to be reserved where syndicated and bilateral facilities mature
within one year, or when commercial paper is issued. The available financial
headroom, being the total amount of cash and available undrawn facilities, net
of commercial paper, at 31 March 2026 was £1,266m (2025: £1,101m).
15. Provisions
Building and fire safety remediation Transaction and contract related Total
£m £m £m
At 1 April 2025 23 51 74
Charge for the year 10 4 14
Utilised during the year (1) (20) (21)
Reversed during the year (3) - (3)
At 31 March 2026 29 35 64
Current 29 12 41
Non-current - 23 23
At 31 March 2026 29 35 64
16. Events after the reporting period
On 14 April 2026, the Group restructured its £300m syndicated term loan
facility on substantially the same terms and extended the final maturity to
November 2028.
On 1 May 2026, the Group cancelled its undrawn £100m revolving bilateral debt
facility that was due to mature in November 2026.
No other significant events occurred after the reporting period but before the
financial statements were authorised for issue.
Alternative performance measures
Table 14: Alternative performance measures
The Group has applied the European Securities and Markets Authority (ESMA)
'Guidelines on Alternative Performance Measures' in these results. In the
context of these results, an alternative performance measure (APM) is a
financial measure of historical or future financial performance, position or
cash flows of the Group which is not a measure defined or specified in IFRS.
The table below summarises the APMs included in these results and where the
reconciliations of these measures can be found. The definitions of APMs are
included in the Glossary.
Alternative performance measure Nearest IFRS measure Reconciliation
EPRA earnings Profit/loss before tax Note 3
EPRA earnings per share Basic earnings/loss per share Note 4
EPRA diluted earnings per share Diluted earnings/loss per share Note 4
EPRA Net Tangible Assets Net assets attributable to shareholders Note 4
EPRA Net Tangible Assets per share Net assets attributable to shareholders Note 4
Total accounting return n/a Note 4
Adjusted net cash inflow from operating activities Net cash inflow from operating activities Note 9
Combined Portfolio Investment properties Note 10
Adjusted net debt Borrowings Note 13
Group LTV n/a Note 13
EPRA LTV n/a Note 13
EPRA disclosures
Table 15: EPRA net asset measures
EPRA net asset measures 31 March 2026
EPRA NRV EPRA NTA EPRA NDV
£m £m £m
Net assets attributable to shareholders 6,537 6,537 6,537
Shortfall of fair value over net investment in finance lease book value (6) (6) (6)
Other intangible asset - (1) -
Fair value of interest-rate swaps (4) (4) -
Shortfall of fair value of debt over book value (note 14) - - 359
Excess of fair value of trading properties over book value 48 48 48
Purchasers' costs(1) 640 - -
Net assets used in per share calculation 7,215 6,574 6,938
EPRA NRV EPRA NTA EPRA NDV
Diluted net assets per share 968p 882p 931p
31 March 2025
EPRA NRV EPRA NTA EPRA NDV
£m £m £m
Net assets attributable to shareholders 6,514 6,514 6,514
Shortfall of fair value over net investment in finance lease book value (8) (8) (8)
Other intangible asset - (2) -
Fair value of interest-rate swaps (1) (1) -
Shortfall of fair value of debt over book value (note 14) - - 334
Excess of fair value of trading properties over book value 27 27 27
Purchasers' costs(1) 668 - -
Net assets used in per share calculation 7,200 6,530 6,867
EPRA NRV EPRA NTA EPRA NDV
Diluted net assets per share 964p 874p 919p
1. EPRA NTA and EPRA NDV reflect IFRS values which are net of purchasers'
costs. Purchasers' costs are added back when calculating EPRA NRV.
Table 16: EPRA performance measures
31 March 2026
Measure Definition for EPRA measure Notes EPRA
measure
EPRA earnings Recurring earnings from core operational activity 4 £382m
EPRA earnings per share EPRA earnings per weighted number of ordinary shares 4 51.4p
EPRA diluted earnings per share EPRA diluted earnings per weighted number of ordinary shares 4 51.1p
EPRA Net Tangible Assets (NTA) Net assets adjusted to exclude the fair value of interest-rate swaps, 4 £6,574m
intangible assets and excess of fair value over net investment in finance
lease book value
EPRA Net Tangible Assets per share Diluted Net Tangible Assets per share 4 882p
EPRA net disposal value (NDV) Net assets adjusted to exclude the fair value of debt and goodwill on deferred 4 £6,938m
tax and to include excess of fair value over net investment in finance lease
book value
EPRA net disposal value per share Diluted net disposal value per share 4 931p
EPRA loan-to-value (LTV) (1) Ratio of adjusted net debt, including net payables, to the sum of the net 13 40.4%
assets, including net receivables, of the Group, its subsidiaries and joint
ventures, all on a proportionate basis, expressed as a percentage
Table
Voids/vacancy rate ERV of vacant space as a % of ERV of Combined Portfolio excluding the 17 2.0%
development programme(2)
Net initial yield (NIY) Annualised rental income less non-recoverable costs as a % of market value 19 5.4%
plus assumed purchasers' costs(3)
Topped-up NIY NIY adjusted for rent free periods(3) 19 6.1%
Cost ratio(4) Total costs as a percentage of gross rental income (including direct vacancy 20 20.8%
costs)(4)
Total costs as a percentage of gross rental income (excluding direct vacancy 20 16.0%
costs)(4)
1. EPRA LTV differs from the Group LTV presented in note 13 as it
includes net payables and receivables and includes trading properties at fair
value and debt instruments at nominal value rather than book value.
2. This measure reflects voids in the Combined Portfolio excluding only
properties under development.
3. This measure relates to the Combined Portfolio, excluding properties
currently under development, and are calculated by our external valuer.
Topped-up NIY reflects adjustments of £60m.
4. This measure is calculated based on gross rental income after rents
payable and excluding costs recovered through rents but not separately
invoiced of £12m.
Table 17: EPRA vacancy rate
The EPRA vacancy rate is based on the ratio of the estimated market rent for
vacant properties versus total estimated market rent, for the Combined
Portfolio excluding properties under development. There are no significant
distorting factors influencing the EPRA vacancy rate.
31 March 2026
£m
ERV of vacant properties 14
ERV of Combined Portfolio excluding properties under development 700
EPRA vacancy rate (%) 2.0
Table 18: Change in net rental income from the like-for-like portfolio(1)
2026 2025((2)) Change
£m £m £m %
Office-led 262 247 15 6%
Retail-led 171 162 9 6%
Residential-led 8 8 - -
Other assets 42 45 (3) (4%)
483 462 21 5%
1. Excludes movement in bad/doubtful debts and surrender premiums received
during the year.
2. Restated for changes in the Group's operating segments as outlined in note
3.
Table 19: EPRA Net initial yield (NIY) and Topped-up NIY
31 March 2026
£m
Combined Portfolio((1)) 10,836
Trading properties 122
Less: Properties under development, trading properties under development and (1,309)
land
Like-for-like investment property portfolio, proposed and completed 9,649
developments, and completed trading properties
Plus: Allowance for estimated purchasers' costs 573
Grossed-up completed property portfolio valuation (a) 10,222
EPRA annualised cash passing rental income(2) 635
Net service charge expense(3) (6)
Void costs and other deductions (73)
EPRA Annualised net rent(2) (b) 556
Plus: Rent-free periods and other lease incentives (annualised) 60
Topped-up annualised net rents (c) 616
EPRA NIY (b/a) 5.4%
EPRA Topped-up NIY (c/a) 6.1%
1. Includes owner-occupied property.
2. EPRA Annualised cash passing rental income and EPRA annualised net rent as
calculated by the Group's external valuer.
3. Including costs recovered through rents but not separately invoiced.
Table 20: Cost analysis
2026 2025
Total Cost ratio %(1) Total Cost ratio
£m £m %((1))
Gross rental income (before rents payable) 656 636
Costs recovered through rents but not separately invoiced (13) (12)
Adjusted gross rental income 643 624
£m Rents payable (12) (12)
Gross rental income (before rents payable) 656 EPRA gross rental income 631 612
Rents payable (12)
Gross rental income (after rents payable) 644 Direct Managed operations 10 20
Net service charge expense (6) property Tenant default (2) (11)
Net direct property expenditure (77) costs Void related costs 30 18
Net other operating income (1) £82m Other direct property costs 40 42
Movement in bad and doubtful debts provision 2
Segment net rental income 562
Net indirect expenses (62) Net indirect Development expenditure 5 6
Segment profit before finance expense 500 expenses Asset management, 61 70
administration and
compliance
Net finance expense - Group (110) £62m
Net finance expense - joint ventures (8)
EPRA earnings 382 Total (incl. direct vacancy costs) 144 145
Costs recovered through rents (13) (12)
EPRA costs (incl. direct vacancy costs) 131 20.8 133 21.7
Less: Direct vacancy costs (30) (18)
EPRA (excl. direct vacancy costs) 101 16.0 115 18.8
1. Percentages represent costs divided by EPRA gross rental income.
Table 21: Acquisitions, disposals and capital expenditure
Year ended Year ended
31 March 2026
31 March 2025
Investment properties Group Joint Adjustment for Combined Combined
ventures
Portfolio
Portfolio
£m
non-wholly owned subsidiaries(1)
£m
£m £m
£m
Net book value at the beginning of the year 10,034 608 (33) 10,609 9,797
Acquisitions 75 - - 75 724
Capital expenditure 443 2 (1) 444 486
Capitalised interest 41 - - 41 27
Net movement in head leases capitalised (2) - - (2) 86
Disposals (669) - - (669) (482)
Net surplus on revaluation of investment properties((2)) 96 27 (1) 122 107
Transfer to non-current assets held for sale - - - - (110)
Transfer to property, plant and equipment - - - - (26)
Net book value at the end of the year 10,018 637 (35) 10,620 10,609
Loss on disposal of investment properties (103) (1) - (104) (12)
Trading properties £m £m £m £m £m
Net book value at the beginning of the year 81 - - 81 100
Transfer to trade and other receivables - - - - (11)
Acquisitions - - - - 10
Capital expenditure 7 - - 7 11
Capitalised interest 1 - - 1 1
Disposals (30) - - (30) (26)
Movement in impairment (3) - - (3) (4)
Net book value at the end of the year 56 - - 56 81
Loss on disposal of trading properties (1) - - (1) (6)
Acquisitions, development and other capital expenditure Investment Trading Combined Combined
properties(3) properties Portfolio Portfolio
£m £m £m £m
Acquisitions(4) 75 - 75 734
Development capital expenditure(5) 298 - 298 318
Other capital expenditure 145 7 151 179
Capitalised interest 41 1 42 28
Acquisitions, development and other capital expenditure 559 8 566 1,259
Disposals £m £m
Net book value - investment property disposals 669 482
Net book value - trading property disposals 30 26
Net book value - other net assets (21) (1)
Loss on disposal - investment properties (104) (15)
Loss on disposal - trading properties (2) (6)
Other - 61
Total disposal proceeds 572 547
1. This represents the interest in Liverpool ONE that is not owed by the Group
but is consolidated in the Group financial statements.
2. Whilst the Group's accounting policy is to recognise the profit/(loss) on
disposal of investment properties with reference to the asset's carrying
amount at the beginning of the accounting period, £22m of the balance
pertains to revaluation movements arising from rental income received from 1
April 2025 to the date of disposal on the Queen Anne's Mansions office block.
3. See EPRA analysis of capital expenditure table 22 for further details.
4. Properties acquired in the year includes £14m for the acquisition of an
additional 2.78% stake in Liverpool ONE through accretive debt repayment.
5. Development capital expenditure for investment properties comprises
expenditure on the development pipeline and completed developments.
Table 22: EPRA analysis of capital expenditure
Year ended 31 March 2026
Other capital expenditure
Acquisitions(1) Development capital expenditure(2) Incremental lettable space(3) No incremental lettable space Tenant improvements Total Capitalised interest Total capital expenditure - Combined Portfolio Total capital expenditure - joint ventures Adjustment for non-wholly owned subsidiaries Total capital expenditure -
£m £m £m £m £m £m £m £m (Group share) £m Group
£m
£m
Office-led
West End offices - 5 - 31 1 32 1 38 (1) - 39
City and Southwark offices - 4 - 29 - 29 2 35 - - 35
Manchester offices - - - 3 - 3 - 3 - - 3
Retail and other - - - 8 2 10 - 10 - - 10
Developments 63 245 - - - - 35 343 - - 343
Total Office-led 63 254 - 71 3 74 38 429 (1) - 430
Retail-led
Shopping centres - 3 7 33 12 52 1 56 2 (12) 66
Outlets - - - 11 1 12 - 12 - - 12
Total Retail-led - 3 7 44 13 64 1 68 2 (12) 78
Residential-led
Developments - 41 - - - - 2 43 1 - 42
Total Residential-led - 41 - - - - 2 43 1 - 42
Other assets
Retail and leisure parks 28 - - 2 7 9 - 37 - - 37
Other - - - - - - - - - - -
Total Other assets 28 - - 2 7 9 - 37 - - 37
Total capital expenditure 91 298 7 117 23 147 41 577 2 (12) 587
Timing difference between accrual and cash basis (42) 3 12 (57)
Total capital expenditure on a cash basis 535 5 - 530
1. Investment properties acquired in the year.
2. Expenditure on the future development pipeline and completed developments.
3. Capital expenditure where the lettable area increases by at least 10%.
Table 23: Top 12 occupiers at 31 March 2026
% of Group rent(1)
Deloitte 2.2%
BBC 2.0%
Taylor Wessing 1.7%
Qube Research & Technologies 1.6%
Inditex UK 1.6%
Verition Advisors UK 1.2%
Boots UK 1.1%
Q Park 1.1%
Cineworld 1.0%
Primark 0.9%
JD Sports Fashion 0.9%
Marks & Spencer 0.9%
16.2%
1. On a proportionate basis.
Table 24: Combined Portfolio analysis
Total portfolio analysis
Market value(1) Valuation Rental income(1) Annualised rental income(2) Net estimated rental value(3)
movement(1)
31 March 2026 31 March 2025((4)) Surplus/ Surplus/ (deficit) 31 March 2026 31 March 2025((4)) 31 March 2026 31 March 2025((4)) 31 March 2026 31 March 2025((4))
(deficit)
£m £m £m % £m £m £m £m £m £m
Office-led
West End offices 2,930 3,124 29 1.1 152 162 136 164 192 202
City and Southwark offices 1,481 1,445 27 1.9 89 80 90 85 113 111
Manchester offices 303 258 6 2.0 25 24 28 22 30 28
Retail and other 1,032 1,139 (12) (1.2) 60 59 57 60 58 60
Developments(5) 1,273 1,108 (57) (4.3) 1 2 - - 91 85
Total Office-led 7,019 7,074 (7) (0.1) 327 327 311 331 484 486
Retail-led
Shopping centres 2,293 2,132 103 4.8 211 171 206 200 214 205
Outlets 662 627 23 3.7 53 51 49 48 54 52
Total Retail-led 2,955 2,759 126 4.6 264 222 255 248 268 257
Residential-led
Developments(5) 318 275 0.3 0.1 12 12 11 11 27 14
Total Residential-led 318 275 0.3 0.1 12 12 11 11 27 14
Other assets
Retail and leisure parks 544 772 5 1.0 53 73 47 67 49 66
Other - - - - - 2 - - - -
Total Other assets 544 772 5 1.0 53 75 47 67 49 66
Combined Portfolio 10,836 10,880 124 1.2 656 636 624 657 828 823
Properties treated as finance leases - - - - (1) (1)
Combined Portfolio 10,836 10,880 124 1.2 655 635
Represented by:
Investment portfolio 10,175 10,244 98 1.0 569 585 539 575 736 735
Share of joint ventures 661 636 26 4.3 86 50 85 82 92 88
Combined Portfolio 10,836 10,880 124 1.2 655 635 624 657 828 823
Total portfolio
analysis
Notes:
Net initial yield(6) Equivalent yield(7) 1. Refer to Glossary for definition.
31 March 2026 Movement in like-for-like(8) 31 March 2026 Movement in like-for-like(8)
% bps % bps 2. Annualised rental income is annual 'rental income' (as defined in the
Office-led Glossary) at the balance sheet date, except that car park and
West End offices 3.9 15 5.6 15 commercialisation income are included on a net basis (after deduction for
City and Southwark offices 5.0 76 6.2 6 operational outgoings). Annualised rental income includes temporary lettings.
Manchester offices 6.9 37 8.2 21
Retail and other((9)) 4.7 31 4.8 (14) 3. Net estimated rental value is gross estimated rental value, as defined
Developments(5) 0.0 n/a 5.7 n/a in the Glossary, after deducting expected rent payable.
Total Office-led 4.5 40 5.9 14
Retail-led 4. Restated for changes in the Group's operating segments as outlined in
Shopping centres 7.1 (8) 7.7 (7) note 3.
Outlets 6.1 (20) 6.7 (19)
Total Retail-led 6.6 (7) 7.1 (10) 5. Comprises the development pipeline - refer to Glossary for definition.
Residential-led
Developments(5) 4.1 n/a 6.5 n/a 6. Net initial yield - refer to Glossary for definition. This calculation
Total Residential-led 4.1 n/a 6.5 n/a includes all properties including those sites with no income.
Other assets
Retail and leisure parks 7.1 (44) 8.2 7 7. Equivalent yield - refer to Glossary for definition. Future
Total Other assets 7.1 (49) 8.2 7 developments are excluded from the calculation of equivalent yield on the
Combined Portfolio 5.4 15 6.3 3 Combined Portfolio.
Represented by: 8. The like-for-like portfolio - refer to Glossary for definition.
Investment portfolio 5.3 n/a 6.5 n/a
Share of joint ventures 5.9 n/a 6.2 n/a 9. Includes owner-occupied property.
Combined Portfolio 5.4 n/a 6.3 n/a
1. Refer to Glossary for definition.
2. Annualised rental income is annual 'rental income' (as defined in the
Glossary) at the balance sheet date, except that car park and
commercialisation income are included on a net basis (after deduction for
operational outgoings). Annualised rental income includes temporary lettings.
3. Net estimated rental value is gross estimated rental value, as defined
in the Glossary, after deducting expected rent payable.
4. Restated for changes in the Group's operating segments as outlined in
note 3.
5. Comprises the development pipeline - refer to Glossary for definition.
6. Net initial yield - refer to Glossary for definition. This calculation
includes all properties including those sites with no income.
7. Equivalent yield - refer to Glossary for definition. Future
developments are excluded from the calculation of equivalent yield on the
Combined Portfolio.
8. The like-for-like portfolio - refer to Glossary for definition.
9. Includes owner-occupied property.
Table 25: Floor Areas((1))
31 March 2026
Million sq ft
Office-led
West End offices 2.4
City and Southwark offices 1.5
Manchester offices 0.9
Retail and other 1.0
Developments 0.3
Total Office-led 6.1
Retail-led
Shopping centres 10.4
Outlets 1.1
Total Retail-led 11.5
Residential-led
Developments 1.0
Total Residential-led 1.0
Other assets
Retail and leisure parks 3.5
Total Other assets 3.5
Total 22.1
1. Joint ventures are reflected at 100% values, not Group share.
Table 26: Property Income Distribution (PID) calculation
Year ended Year ended
31 March 2026
31 March 2025
£m £m
Profit before tax per income statement 346 393
Accounting profit on residual operations 32 45
Profit/(loss) attributable to tax-exempt operations 378 438
Adjustments
Capital allowances (84) (56)
Capitalised interest (42) (29)
Revaluation deficit/(surplus) (122) (117)
Tax exempt disposals 5 (18)
Capital expenditure 5 5
Other tax adjustments 113 6
REIT dividends received (10) (11)
Estimated tax-exempt income for the year 243 218
PID thereon (90%) 218 197
REIT dividends received (100%) 10 11
Minimum PID to be paid 228 208
As a REIT, our income and capital gains from qualifying activities are exempt
from corporation tax. 90% of this income must be distributed as a Property
Income Distribution and is taxed at the shareholder level to give a similar
tax position to direct property ownership. Non-qualifying activities, such as
sales of trading properties, are subject to corporation tax. This year, there
was a £2m current tax charge (2025: £3m credit).
The table above provides a reconciliation of the Group's profit/(loss) before
tax to its estimated tax exempt income, 90% of which the Company is required
to distribute as a PID to comply with REIT regulations. The Company also needs
to distribute 100% of REIT dividends received. The comparatives have been
updated to reflect the actual balances for the year ended 31 March 2026.
The Company has 12 months after the year end to make the minimum distribution.
Accordingly, PID dividends paid in the year may relate to the distribution
requirements of previous periods. The table below sets out the dividend
allocation for the years ended 31 March 2026 and 31 March 2025:
PID allocation Dividends in excess of minimum PID Total
dividend
Year ended Year ended Pre-31
31 March 2026
31 March 2025
March 2025
£m £m
£m £m £m
Dividends paid in year to 31 March 2025 - 208 - 89 297
Dividends paid in year to 31 March 2026 228 - - 35 263
Minimum PID to be paid by 31 March 2027 - - n/a n/a -
Total PID required 228 208
The Group has met all the REIT requirements, including the payment by 31 March
2026 of the minimum Property Income Distribution (PID) for the year ended 31
March 2025. The forecast minimum PID for the year ended 31 March 2026 is
£228m, which must be paid by 31 March 2027. The Group has already made PID
dividends relating to 31 March 2026 of £228m.
Our latest tax strategy can be found on our corporate website. In the year,
the total taxes we incurred and collected were £161m (2025: £135m), of which
£46m (2025: £36m) was directly borne by the Group including environmental
taxes, business rates and stamp duty land tax.
Investor information
1. Company website: landsec.com (http://www.landsec.com)
The Group's half-yearly and annual reports to shareholders, results
announcements and presentations, are available to view and download from the
Company's website. The website also provides details of the Company's current
share price, the latest news about the Group, its properties and operations,
and details of future events and how to obtain further information.
2. Registrar: Equiniti Limited
Enquiries concerning shareholdings, dividends and changes in personal details
should be referred to the Company's registrar, Equiniti Limited (Equiniti), in
the first instance. They can be contacted using the details below:
Telephone:
- 0371 384 2128 (from the UK)
- +44 371 384 2128 (from outside the UK)
- Lines are ordinarily open from 08:30 to 17:30, Monday to Friday,
excluding UK public holidays.
Correspondence address:
Equiniti Limited
Highdown House
Yeoman Way
Worthing
BN99 6DA
Information on how to manage your shareholding can be found at
https://help.shareview.co.uk (https://help.shareview.co.uk) . If you are not
able to find the answer to your question within the general Help information
page, a personal enquiry can be sent directly through Equiniti's secure e-form
on their website. Please note that you will be asked to provide your name,
address, shareholder reference number and a valid e-mail address.
Alternatively, shareholders can view and manage their shareholding through the
Landsec share portal which is hosted by Equiniti - simply visit
https://portfolio.shareview.co.uk (https://portfolio.shareview.co.uk) and
follow the registration instructions.
3. Shareholder enquiries
If you have an enquiry about the Company's business or about something
affecting you as a shareholder (other than queries which are dealt with by the
Registrar), please email Investor Relations (see details in 8. below).
4. Share dealing services: https://shareview.co.uk
(http://www.shareview.co.uk)
The Company's shares can be traded through most banks, building societies and
stockbrokers. They can also be traded through Equiniti. To use their service,
shareholders should contact Equiniti: 0345 603 7037 from the UK. Lines are
ordinarily open Monday to Friday 08:00 to 16:30 for dealing and until 18:00
for enquiries, excluding UK public holidays.
5. Dividends
The Board has recommended a final dividend for the year ended 31 March 2026 of
22.2p per ordinary share to be paid as a Property Income Distribution (PID).
Subject to shareholders' approval at the Annual General Meeting, the final
dividend will be paid on 24 July 2026 to shareholders registered at the close
of business on 19 June 2026. The last date for Dividend Reinvestment Plan
(DRIP) elections will be 03 July 2026. The total dividend paid and payable in
respect of the year ended 31 March 2026 is 41.2p (2025: 40.4p).
For the year ending 31 March 2027, the Group will pay two half-yearly
dividends, likely to be in January 2027 and July 2027.
6. Dividend related services
Dividend payments to UK shareholders - Dividend mandates
Dividends are no longer paid by cheque. Shareholders whose dividends have
previously been paid by cheque will need to have their dividends paid directly
into their personal bank or building society account or alternatively
participate in our Dividend Reinvestment Plan (see below) to receive dividends
in the form of additional shares. To facilitate this, please contact Equiniti
or complete a mandate instruction available on our website:
https://www.landsec.com/en/investors/investors-overview
(https://www.landsec.com/en/investors/investors-overview) and return it to
Equiniti.
Dividend payments to overseas shareholders - Overseas Payment Service (OPS)
Dividends are no longer paid by cheque. Shareholders need to request that
their dividends be paid directly to a personal bank account overseas. For more
information, please contact Equiniti or download an application form online at
https://shareview.co.uk (http://www.shareview.co.uk) .
Dividend Reinvestment Plan (DRIP)
A DRIP is available from Equiniti. This facility provides an opportunity by
which shareholders can conveniently and easily increase their holding in the
Company by using their cash dividends to buy more shares. Participation in the
DRIP will mean that your dividend payments will be reinvested in the Company's
shares and these will be purchased on your behalf in the market on, or as soon
as practical after, the dividend payment date.
You may only participate in the DRIP if you are resident in the UK.
For further information (including terms and conditions) and to register for
any of these dividend-related services, simply visit www.shareview.co.uk
(http://www.shareview.co.uk) .
7. Financial reporting calendar
2026
Financial year end 31 March
Preliminary results announcement 14 May
Annual General Meeting 09 July
8. Investor relations enquiries
For investor relations enquiries, please contact Edward Thacker, Head of
Investor Relations at Landsec, by telephone on +44 (0)20 7413 9000 or by email
at enquiries@landsec.com.
Glossary
Adjusted net cash inflow from operating activities
Net cash inflow from operating activities including the Group's share of our
joint ventures' net cash inflow from operating activities.
Adjusted net debt
Net debt excluding cumulative fair value movements on interest-rate swaps and
amounts payable under head leases. It generally includes the net debt of
subsidiaries and joint ventures on a proportionate basis.
Combined Portfolio
The Combined Portfolio comprises the investment properties, owner-occupied
property and non-current assets held for sale of the Group's subsidiaries, on
a proportionately consolidated basis when not wholly owned, together with our
share of investment properties held in our joint ventures.
Developments/development pipeline
Development pipeline consists of future developments, committed developments,
projects under construction and developments which have reached practical
completion within the last two years but are not yet 95% let.
Development gross yield on total development cost
Gross ERV, before adjustment for lease incentives, divided by total
development cost. Gross ERV reflects Landsec's or the valuer's view of
expected ERV at completion of the scheme.
EPRA earnings
Profit before tax, excluding profits on the sale of non-current assets and
trading properties, profits on development contracts, valuation movements,
fair value movements on interest-rate swaps and similar instruments used for
hedging purposes, debt restructuring charges, and any other items of an
exceptional nature.
EPRA loan-to- value (LTV)
Ratio of adjusted net debt, including net payables, to the sum of the net
assets, including net receivables, of the Group, its subsidiaries and joint
ventures, all on a proportionate basis, expressed as a percentage. The
calculation includes trading properties at fair value and debt at nominal
value.
EPRA net disposal value (NDV) per share
Diluted net assets per share adjusted to remove the impact of goodwill arising
as a result of deferred tax, and to include the difference between the fair
value and the book value of the net investment in tenant finance leases and
fixed interest rate debt.
EPRA net initial yield
EPRA net initial yield is defined within EPRA's Best Practice Recommendations
as the annualised rental income based on the cash rents passing at the balance
sheet date, less non-recoverable property operating expenses, divided by the
gross market value of the property. It is consistent with the net initial
yield calculated by the Group's external valuer.
EPRA Net Reinstatement Value (NRV) per share
Diluted net assets per share adjusted to remove the cumulative fair value
movements on interest-rate swaps and similar instruments, the carrying value
of deferred tax on intangible assets and to include the difference between the
fair value and the book value of the net investment in tenant finance leases
and add back purchasers' costs.
EPRA Net Tangible Assets (NTA) per share
Diluted net assets per share adjusted to remove the cumulative fair value
movements on interest-rate swaps and similar instruments, the carrying value
of goodwill arising as a result of deferred tax and other intangible assets,
deferred tax on intangible assets and to include the difference between the
fair value and the book value of the net investment in tenant finance leases.
Equivalent yield
Calculated by the Group's external valuer, equivalent yield is the internal
rate of return from an investment property, based on the gross outlays for the
purchase of a property (including purchase costs), reflecting reversions to
current market rent and such items as voids and non-recoverable expenditure
but ignoring future changes in capital value. The calculation assumes rent is
received annually in arrears.
ERV - Gross estimated rental value
The estimated market rental value of lettable space as determined biannually
by the Group's external valuer. For investment properties in the development
programme, which have not yet reached practical completion, the ERV represents
management's view of market rents.
Gearing
Total borrowings, including bank overdrafts, less short-term deposits,
corporate bonds and cash, at book value, plus cumulative fair value movements
on financial derivatives as a percentage of total equity. For adjusted
gearing, see note 20.
Gross market value
Market value plus assumed usual purchaser's costs at the reporting date.
Interest Cover Ratio (ICR)
A calculation of a company's ability to meet its interest payments on
outstanding debt. It is calculated using EPRA earnings before interest,
divided by net interest (excluding the mark-to-market movement on
interest-rate swaps, foreign exchange swaps, capitalised interest and interest
on the pension scheme assets and liabilities). The calculation excludes joint
ventures.
Investment portfolio
The investment portfolio comprises the investment properties of the Group's
subsidiaries on a proportionately consolidated basis where not wholly owned.
Lease incentives
Any incentive offered to occupiers to enter into a lease. Typically, the
incentive will be an initial rent-free period, or a cash contribution to
fit-out or similar costs. For accounting purposes, the value of the incentive
is spread over the non-cancellable life of the lease.
Like-for-like portfolio
The like-for-like portfolio includes all properties which have been in the
portfolio since 1 April 2023 but excluding those which are acquired or sold
since that date. Properties in the development pipeline and completed
developments are also excluded.
Loan-to-value (LTV)
Group LTV is the ratio of adjusted net debt, including subsidiaries and joint
ventures, to the sum of the market value of investment properties and the book
value of trading properties of the Group, its subsidiaries and joint ventures,
all on a proportionate basis, expressed as a percentage. For the Security
Group, LTV is the ratio of net debt lent to the Security Group divided by the
value of secured assets.
Market value
Market value is determined by the Group's external valuer, in accordance with
the RICS Valuation Standards, as an opinion of the estimated amount for which
a property should exchange on the date of valuation between a willing buyer
and a willing seller in an arm's-length transaction after proper marketing.
Net initial yield
Net initial yield is a calculation by the Group's external valuer of the yield
that would be received by a purchaser, based on the Estimated Net Rental
Income expressed as a percentage of the acquisition cost, being the market
value plus assumed usual purchasers' costs at the reporting date. The
calculation is in line with EPRA guidance. Estimated Net Rental Income is
determined by the valuer and is based on the passing cash rent less rent
payable at the balance sheet date, estimated non-recoverable outgoings and
void costs including service charges, insurance costs and void rates.
Net rental income
Net rental income is the net operational income arising from properties, on an
accruals basis, including rental income, finance lease interest, rents
payable, service charge income and expense, other property related income,
direct property expenditure and bad debts. Net rental income is presented on a
proportionate basis.
Net zero carbon building
A building for which an overall balance has been achieved between carbon
emissions produced and those taken out of the atmosphere, including via offset
arrangements. This relates to operational emissions for all buildings while,
for a new building, it also includes supply-chain emissions associated with
its construction.
Passing rent
The estimated annual rent receivable as at the reporting date which includes
estimates of turnover rent and estimates of rent to be agreed in respect of
outstanding rent review or lease renewal negotiations. Passing rent may be
more or less than the ERV (see over-rented, reversionary and ERV). Passing
rent excludes annual rent receivable from units in administration save to the
extent that rents are expected to be received. Void units at the reporting
date are deemed to have no passing rent. Although temporary lets of less than
12 months are treated as void, income from temporary lets is included in
passing rents.
Property Income Distribution (PID)
A PID is a distribution by a REIT to its shareholders paid out of qualifying
profits. A REIT is required to distribute at least 90% of its qualifying
profits as a PID to its shareholders.
Rental income
Rental income is as reported in the income statement, on an accruals basis,
and adjusted for the spreading of lease incentives over the term certain of
the lease in accordance with IFRS 16. It is stated gross, prior to the
deduction of ground rents and without deduction for operational outgoings on
car park and commercialisation activities.
Reversionary or under-rented
Space where the passing rent is below the ERV.
Reversionary yield
The anticipated yield to which the initial yield will rise (or fall) once the
rent reaches the ERV.
Security Group
Security Group is the principal funding vehicle for the Group and properties
held in the Security Group are mortgaged for the benefit of lenders. It has
the flexibility to raise a variety of different forms of finance.
Topped-up net initial yield
Topped-up net initial yield is a calculation by the Group's external valuer.
It is calculated by making an adjustment to net initial yield in respect of
the annualised cash rent foregone through unexpired rent-free periods and
other lease incentives. The calculation is consistent with EPRA guidance.
Total accounting return (previously Total return on equity)
Dividend paid per share in the year plus the change in EPRA Net Tangible
Assets per share, divided by EPRA Net Tangible Assets per share at the
beginning of the year.
Total cost ratio
Total cost ratio represents all costs included within EPRA earnings, other
than rents payable, financing costs and provisions for bad and doubtful debts,
expressed as a percentage of gross rental income before rents payable adjusted
for costs recovered through rents but not separately invoiced.
Total development cost (TDC)
Total development cost refers to the book value of the site at the
commencement of the project, the estimated capital expenditure required to
develop the scheme from the start of the financial year in which the property
is added to our development programme, together with capitalised interest,
being the Group's borrowing costs associated with direct expenditure on the
property under development. Interest is also capitalised on the purchase cost
of land or property where it is acquired specifically for redevelopment. The
TDC for trading property development schemes excludes any estimated tax on
disposal.
Trading properties
Properties held for trading purposes and shown as current assets in the
balance sheet.
Vacancy rates
Vacancy rates are expressed as a percentage of ERV and represent all unlet
space, including vacant properties where refurbishment work is being carried
out and vacancy in respect of pre-development properties, unless the scale of
refurbishment is such that the property is not deemed lettable. The screen at
Piccadilly Lights, W1 is excluded from the vacancy rate calculation as it will
always carry advertising although the number and duration of our agreements
with advertisers will vary.
Valuation surplus/deficit
The valuation surplus/deficit represents the increase or decrease in the
market value of the Combined Portfolio, adjusted for net investment and the
effect of accounting for lease incentives under IFRS 16. The market value of
the Combined Portfolio is determined by the Group's external valuer.
Voids
Voids are expressed as a percentage of ERV and represent all unlet space,
including voids where refurbishment work is being carried out and voids in
respect of pre-development properties. Temporary lettings for a period of one
year or less are also treated as voids. The screen at Piccadilly Lights, W1 is
excluded from the void calculation as it will always carry advertising
although the number and duration of our agreements with advertisers will vary.
Commercialisation lettings are also excluded from the void calculation.
Weighted average unexpired lease term
The weighted average of the unexpired term of all leases other than short-term
lettings such as car parks and advertising hoardings, temporary lettings of
less than one year, residential leases and long ground leases.
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