REG - Land Sec. Group PLC - Final Results
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RNS Number : 9199I Land Securities Group PLC 16 May 2025
16 May 2025
LAND SECURITIES GROUP PLC ("Landsec")
Results for the year ended 31 March 2025
Strong operational results set to drive continued growth
Mark Allan, Chief Executive of Landsec, commented:
"Our portfolio again delivered very strong performance with like-for-like net
rental income growth of 5.0%, supporting growth in both earnings and portfolio
valuation over the year. Owning the right real estate has never been more
important and, with a very healthy pipeline of occupier demand, this trend
looks set to continue, providing a clear trajectory for further near and
medium-term EPS growth.
"Our undoubted portfolio quality is a result of proactive and successful
capital recycling over recent years and this will continue to be a focus for
us. Our capital allocation decisions from here are about ensuring that the
growth outlook for our portfolio in 3-5 years' time is as positive as it is
for our current portfolio today. That is why we have set out a clear plan to
increase investment in major retail by a further £1bn and establish a £2bn+
residential platform by 2030, to be funded by rotating £3bn of capital out of
offices, non-core investments and low or non-yielding pre-development assets.
Delivering on this strategy, whilst continuing to drive sustainable income and
EPS growth, is our priority and we are firmly underway."
Financial highlights
2025 2024 2025 2024
EPRA earnings (£m)(1)(2) 374 371 Profit/(loss) before tax (£m) 393 (341)
EPRA EPS (pence)(1)(2) 50.3 50.1 Basic EPS (pence) 53.3 (43.0)
EPRA NTA per share (pence)(1)(2) 874 859 Net assets per share (pence) 877 863
Total return on equity (%)(1)(2) 6.4 (4.0) Dividend per share (pence) 40.4 39.6
Group LTV ratio (%)(1)(2) 39.3 35.0 Net debt (£m) 4,341 3,594
¾ EPRA earnings up £3m to £374m, as strong 5.0% LFL net rental income
growth and lower overhead costs more than offset impact from significant
disposals early in year and a rise in finance costs
¾ EPRA EPS(1)(2) up 0.4% to 50.3p, in line with expectations and ahead of
initial guidance
¾ Total dividend up 2.0% to 40.4p per share, in line with guidance
¾ Profit before tax up to £393m, as strong 4.2% ERV growth supported
£119m or 1.1% uplift in portfolio value, resulting in 6.4% return on equity
and 1.7% increase in EPRA NTA per share
¾ Group LTV of 38.4% and average net debt/EBITDA of 7.7x pro-forma for
disposals since year-end, as long 9.6-year average debt maturity underpins
resilience of capital base
¾ Further LFL growth and efficiency improvements, alongside portfolio
rebalancing to enhance long term growth, provides c. 20% EPRA EPS growth
potential by FY30, with c. 2-4% growth expected in FY26
Operational highlights
¾ Delivered 5.0% LFL net rental income growth, ahead of guidance, with 8%
rental uplifts on relettings / renewals in London and major retail, and
continued strong leasing momentum since the year-end
¾ Increased occupancy by 100bps on a LFL basis to 97.2%, the highest level
in five years
¾ Drove 4.2% ERV growth through successful leasing activity, adding to
future income growth potential
¾ Reduced overhead costs by 5%, with more than 10% further savings expected
over FY26-27
Central London income growth increases, as investment market activity starts
to pick up
¾ Delivered 6.6% LFL net rental income growth, with occupancy up 120bps to
98.0%, £24m of lettings signed or in solicitors' hands 7% above ERV, and
relettings/renewals 13% above previous rent
¾ Drove 5.2% ERV growth, as customer demand remains focused on high-quality
space in best locations, with growth for current year expected to be at
broadly similar levels
¾ Reversionary potential increased to 12%, paving way for further near-term
LFL income growth
¾ Portfolio valuation up 1.0%, as yields start to stabilise and investment
market activity continues to pick up steadily, supporting planned release of
£2bn of capital employed from FY27 onwards
¾ Set to complete £860m of developments in late FY26 at accretive 7.1%
gross yield on cost, with encouraging customer interest expected to translate
into first pre-letting activity in second half
Major Retail income up strongly, as brands focus on best destinations
¾ Delivered 5.1% LFL net rental income growth, with occupancy up 110bps to
96.6%, £39m of lettings signed or in solicitors' hands 11% above ERV, and
relettings/renewals 8% above previous rent
¾ Drove 4.0% ERV growth, capitalising on continued focus from brands on
fewer, bigger, better stores, with similar growth expected for current year
¾ Expect continued LFL income growth, as leasing pipeline remains strong
and rental uplifts grow
¾ Portfolio valuation up 3.4%, reflecting attraction of high-quality,
growing income
¾ Invested £610m in Liverpool ONE and Bluewater acquisitions at average
7.7% income return, with aim to invest a further £1bn in highly accretive
growth of major retail platform over next 1-3 years
Progressed preparation of sizeable residential pipeline, ahead of first
potential starts in late 2026
¾ Started on site with infrastructure works, secured vacant possession and
completed demolition for first phase of consented 1,800-homes Finchley Road
scheme in Zone 2, London
¾ Renegotiated development agreement at Mayfield, Manchester, unlocking
option to deliver c. 1,700 homes from 2026 onwards, with decision on detailed
planning for first phase expected in second half
¾ Submitted outline/detailed planning application for masterplan in
Lewisham, Zones 2&3, London, covering up to 2,800 homes, with planning
decision expected in second half of year
¾ Preparing for first potential residential development starts in late
2026, as part of strategic objective to invest £2bn+ in this structural
growth sector by FY30
Maintained strong capital base, with £655m of capital recycling broadly in
line with book value
¾ Sold £496m of non-core assets during year plus a further £159m since
year-end, on average 1% below Mar-24 book value, with further non-core
disposals expected in near term
¾ Maintained solid capital base, with 9.6-year average debt maturity,
£1.1bn cash and undrawn facilities, and pro-forma for disposals post
year-end, 7.7x average net debt/EBITDA and 38.4% LTV
¾ Capitalised on sector-leading access to credit during year, with £350m
10-year bond issue at 4.625% coupon and refinancing of £2.25bn revolving
credit facilities at existing low margins
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 9.00am 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://webcast.landsec.com/2025-full-year-results
(https://webcast.landsec.com/2025-full-year-results)
Call title: Landsec Full Year Results 2025
Conference call:
https://webcast.landsec.com/2025-full-year-results/vip_connect
(https://webcast.landsec.com/2025-full-year-results/vip_connect)
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
A clear trajectory for growth, both near and longer term
Owning the right real estate has never been more important. Irrespective of
sector, there is a clear focus from customers on best-in-class space and as
this space remains in short supply, rents are growing. As such, we are
confident in how we have repositioned our portfolio over the past four years.
The success of this is vindicated by the strength of our operational
performance, with like-for-like rental income up 5.0% and like-for-like
occupancy up 100bps to 97.2%, substantially outperforming wider markets.
In the long run, it is clear that income growth is the main driver of value
growth in both equity markets and real estate, so our primary focus is on
delivering sustainable income and EPS growth. For an £11bn REIT like us,
materially shifting portfolio mix takes time, so we need to think differently
about what drives EPS growth near term and what we believe will drive it
longer term, as these are not necessarily the same.
In the near term, most of our EPS growth will be driven by the assets we own
today, not the assets we decide to buy or develop from here. In that respect,
we expect our customers' focus on quality to persist and for this to support
continued like-for-like rental income growth. This encouraging outlook on
income is further supported by our clear plans to further reduce overhead
costs by over 10% over the next two years following the 13% saving we already
made over the last two years. These two factors combined underpin our
expectations for positive near-term EPS growth.
The capital allocation decisions we make today have more impact on EPS growth
in the medium to longer term. As such, our decisions on development and
recycling capital today are therefore about making sure that in 3-5 years'
time, our asset mix is such that we are still as confident about the income
growth prospects of our portfolio at that point, as we are about our current
portfolio today.
These two factors - impact on sustainable income and EPS growth nearer term
and impact on desired portfolio mix longer term - are, alongside our
assessment of risk, the primary guide for our capital allocation decisions. It
is this framework which underpinned our decision to invest £0.6bn of capital
in two of the very best retail destinations in the UK over the past year -
Liverpool ONE and Bluewater - and to sell £0.4bn of ageing hotels with a
substantial capex bill looming. It is also what underpins our aim to invest a
further £1bn in major retail over the next 1-3 years, as we monetise further
non-core assets and surplus land. And, on a 2-5 year view, our aim to reduce
our capital employed in offices by £2bn to build a sizeable residential
platform, which we believe will provide higher structural growth and lower
volatility.
Whilst we are mindful of the recent rise in global economic uncertainty, we
are yet to see any impact of this on customer demand or investment markets.
Given the actions we have taken over the past few years, our outlook for EPS
growth and return on equity therefore remains positive. Executing our strategy
will build further on this and deliver material value for shareholders by
moving to higher income, higher income growth and lower cyclicality in the
medium term.
Strong operational performance underpins solid financial results
Our operational performance over the past year has been strong. Occupancy
increased to a high 97.2% and we delivered 5.0% growth in like-for-like net
rental income, with strong growth across London and major retail. For both,
our reversionary potential is growing, with 8% rental uplifts on
relettings/renewals. In retail in particular, this trend has continued to
rise, up from 1% last year to 4% at the half year, 7% for the full year and
10% for current lettings. Overall leasing was 4% above ERV, driving 4.2% ERV
growth.
Our strong operational performance and £4m reduction in overhead costs, on
top of the £7m reduction in the prior year, mean our financial results for
the year are positive. Despite the earnings impact of the significant
disposals we made early in the year, EPRA earnings still increased £3m to
£374m, or 50.3 pence per share. This was also despite the fact that the prior
year benefitted from £14m, or 1.9 pence, higher surrender receipts than the
last twelve months and means EPS is ahead of our initial guidance for the
year. Reflecting this, our dividend is up 2.0%.
The valuation of our portfolio was up 1.1%, in line with our view a year ago
that yields were set to stabilise and values for the best assets would return
to growth. As such, our return on equity improved to 6.4% and NTA per share
increased 1.7%. Meanwhile, our balance sheet remains robust, with a long
average debt maturity of 9.6 years. Pro-forma for disposals since the
year-end, our LTV is 38.4% and average net debt/EBITDA is 7.7 times. Following
a £350m 10-year bond issue at 4.625%, representing a 97bps credit spread, and
refinancing of £2.25bn revolving credit facilities at stable margins during
the year, the benefit of our balance sheet strength is clear and maintaining
this remains a key priority.
Table 1: Highlights
Mar 2025 Mar 2024 Change %
EPRA earnings (£m)(1) 374 371 0.8
IFRS profit/(loss) before tax (£m) 393 (341) n/a
Total return on equity (%) 6.4 (4.0) 10.4
Basic earnings/(loss) per share (pence) 53.3 (43.0) n/a
EPRA earnings per share (pence)(1) 50.3 50.1 0.4
Dividend per share (pence) 40.4 39.6 2.0
Combined portfolio (£m)(1)(2) 10,880 9,963 9.2
IFRS net assets (£m) 6,532 6,447 1.3
EPRA Net Tangible Assets per share (pence)(1) 874 859 1.7
Adjusted net debt (£m)(1) 4,304 3,517 22.4
Group LTV ratio (%)(1) 39.3 35.0 4.3
Proportion of portfolio rated EPC A - B (%) 56 49
Average upfront embodied carbon reduction development pipeline (%) 41 40
Energy intensity reduction vs 2020 (%) 23 18
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.
Our strategy
Through targeted investments and £3.3bn of disposals since our Strategy
Review in late 2020, we have established a high-quality portfolio and pipeline
of best-in-class office-led, retail-led and residential-led places with
substantial income growth potential. The predominant use of space in each of
these areas differs, yet there is increasingly more binding them together than
setting them apart, as the lines between traditional uses of successful urban
places continue to blur. Our ability to curate these places to adapt to the
evolving demands of modern cities is what supports their sustained growth over
time.
This strategy has paid off, as demand for modern, sustainable office space in
London remains strong and in retail, brands continue to concentrate on fewer,
but bigger and better stores in key locations. As supply of both is
constrained, rents in our portfolio continue to grow, which underpins our
positive view on near-term income and EPS growth. This reflects the
investments decisions we have made in recent years, in terms of assets, but
also in respect of our organisation, people, and technology platform.
Similarly, the investment decisions we make over the next 1-2 years will
determine the trajectory for our returns in 3-5 years' time.
Looking ahead, over the medium to longer term, we see a number of macro trends
that we expect to shape the environment we operate in:
¾ Growing geopolitical risk and climate change mean inflationary pressures
will likely persist, which stresses the importance of driving sustainable
like-for-like income growth;
¾ The normalisation of interest rates means the cost of capital is likely
to remain elevated, putting more emphasis on risk-adjusted returns, the time
value of money, and efficiency;
¾ Technological change means customer expectations will continue to evolve
rapidly, impacting depreciation in sectors with fewer long-term supply
constraints; and lastly,
¾ Continued population growth will mean the existing shortage of urban
housing is set to grow.
The Strategy Update we set out in February this year is built around these
structural trends. In executing this strategy, our primary focus will be on
delivering sustainable income and EPS growth. As a framework for capital
allocation decisions, this means we will prioritise opportunities that deliver
income and EPS growth in the near term but also position our portfolio mix
such that EPS growth can be sustained in the medium to longer term. Beyond
that, there will be a balance between these two factors - near term EPS growth
and impact on our desired portfolio mix - but our decisions will always seek
to enhance at least one of these, without distracting from the other.
This explains why major retail still remains our highest conviction call and
why we seek to grow our retail platform by a further £1bn over the next 1-3
years. Risk-adjusted returns on acquisitions are compelling, with highly
attractive 7-8% day-one income yields; rents having returned to growth from
rebased levels; and zero supply of new space in the foreseeable future, as
capital values are around half of replacement costs, meaning that competition
for the best space is expected to persist and rents continue to grow.
This framework also explains our plan to reduce capital employed in office-led
assets by £2bn to fund the build-up of a £2bn+ residential-led platform over
the next 2-5 years. We are very confident in the near-term income growth
prospects of our high-quality London office assets, as the focus from
customers on best-in-class space and modest new supply in recent years has
created 12% positive reversionary potential. Yet, longer term there are fewer
supply constraints, and demand and hence rents are likely to be more cyclical.
The growth in demand for homes, however, is more structural, as it is
underpinned by long-term demographic trends. This means residential income and
values have been much less volatile historically and we expect this to remain
the case going forward.
Whilst investing in residential offers limited near-term EPS upside, income
growth closely tracks inflation over time and is captured annually, so real
returns are attractive. Net yields of c. 4.5-5% are similar to net effective
income returns on offices after lease incentives, so rotating capital out of
offices into residential should be broadly EPS neutral initially, but offers
higher EPS growth and lower risk over time. The scale-up of our residential
platform is supported by the 6,000-homes development pipeline we have
established over the past few years across three large scale, well-located and
highly-connected sites in London and Manchester, which combined with selective
acquisitions will take us to our £2bn+ target by 2030.
The other implications of our recent strategy update are also clearly
explained by our thinking on capital allocation. We plan to release half of
our £0.7bn capital employed in low/non-yielding pre-development assets over
the next 1-3 years to reduce the holding cost of this, which should improve
earnings by c. £15m p.a. and overall ROE by c. 25-50bps. We also plan to exit
our residual £0.8bn of retail/leisure parks, as day-one yields are reasonable
but like-for-like income growth trails the growth in major retail
destinations. In addition, we will scale back our office-led development by at
least half, to grow our residential development. All of these decisions either
enhance our near term EPS growth, help rebalance our portfolio towards higher
longer-term EPS growth, or contribute to both.
Implications for EPS growth and driving shareholder value
As most of our near-term income and EPS growth will be driven by our current
assets, we are confident in how we have positioned our portfolio and platform
in recent years. Our strong 5.0% growth in like-for-like income over the past
twelve months is testament to this. In addition to continuing to capture the
growing reversion in our existing portfolio and further reducing overhead
costs over the next two years, all else equal, the above capital allocation
decisions would therefore drive c. 30% EPS growth by FY30. Against that, we
have to absorb the impact of interest costs going up as we refinance maturing
debt plus the expiry of the income at Queen Anne's Mansions, which have a
combined negative EPS impact of c. 5 pence, spread over a number of years.
Overall, we therefore see the potential for EPS to grow c. 20% from 50.3
pence over the past year to c. 60 pence by FY30, which adds further to our
attractive existing income return at NTA of 5.8%. Over this period growth
should be relatively linear although the exact year-on-year profile will be
influenced by factors such as the timing of development lettings, with for
example £61m of ERV completing at our two highly sustainable, on-site
developments in Victoria and the Southbank in about a year's time. We are
seeing encouraging customer interest in this space emerge and although it will
take time to lease-up as these are multi-let buildings, they should add £7m
to earnings once fully let. We will not start any new speculative office-led
projects until the expected income on these projects is substantially
de-risked.
Over time, our compound growth in EPS should drive continued growth in
dividends, whilst rebalancing our portfolio towards higher long-term income
growth and lower cyclicality will create a more valuable income profile. In
support of this, we will retain our strong capital base, as we continue to
target a net debt/EBITDA of below 8x and an LTV around the mid 30's at this
stage of the cycle. This will be further enhanced by a reduction in risk
profile and cyclicality, as we reallocate capital from offices to residential.
As we execute our strategy, Landsec is well-placed to deliver significant
shareholder value.
Outlook
The outlook for our best-in-class portfolio and pipeline remains firmly
positive.
In major retail, the top 1% of all shopping destinations in the UK provide
brands with access to 30% of all in-store retail spend. As close to 90% of our
retail assets are in this top 1%, brands continue to invest in space with us,
focussing on 'fewer, bigger, better' stores in the best locations. Any
pressure on brands' margins from increased NI costs or wider economic
uncertainty will likely sharpen this focus further and put more pressure on
the tail-end of brands' store portfolios. As our occupancy is now higher than
it was before Covid, we expect rental value growth this year to be around
similar levels as last year.
In London, office utilisation across our portfolio continues to grow and
customers are now planning for c. 25% more space per person than five years
ago, with c. 80% of our lettings over the past year having seen customers grow
or keep the same space. In the near future, new supply across London is
modest, so we expect our rental values this year to continue to grow at a
broadly similar rate as they did last year. This also bodes well for our two
committed developments, Thirty High and Timber Square, where we expect to see
first pre-let activity in the second half of this year, in line with our
underwrite assumptions.
Meanwhile, in residential, we have created a £3bn development opportunity to
build scale in a sector with strong structural growth characteristics,
attractive real returns and much lower volatility. The attractive long-term
prospects in this space should enhance our sustainable income and EPS growth
over time.
The trends that have supported our strong operational performance over the
past few years remain intact, even though the global economic outlook has
become more uncertain in recent months as a result of shifting US trade
policy. We are mindful of the disruption this can cause but, as a purely UK
focused business with an existing customer base that is primarily focused on
successful omnichannel retail brands, professional services and financial
services and a development pipeline which is increasingly focused on
residential, we are not seeing any impact on customer demand or financial
performance.
In investment markets, we continue to see a steady pick-up in activity across
the UK and increasingly in London offices, albeit from a low base. The outlook
for long-term interest rates is more relevant than the outlook for base rates,
but for assets where there is an opportunity to drive income growth in the
coming years, such as our best-in-class portfolio, there appears to be a
growing understanding amongst investors that real returns look attractive
relative to real interest rates. Absent any major economic shocks, we expect
this will continue to underpin valuations for such assets as investment
activity recovers further.
In summary, we are well-placed due to the successful execution of our 2020
strategy, with clear upside as we deliver the next phase of our strategy. Our
portfolio is 97.2% full, so ERVs are growing. Our office rents are 12%
reversionary and rental uplifts on relettings/renewals in retail have risen to
10%. We are on track to reduce overhead cost by a further 10% over the next
two years, with additional upside to EPS to come from recycling £3bn of
capital out of offices and non-core assets into major retail and residential.
All this means we see the potential to deliver c. 20% growth in EPS by FY30
and with c. 2-4% growth in EPS expected for FY26, supported by c. 3-4% growth
in like-for-like net rental income, we are well on track. We expect this to
support continued growth in dividends and to drive an attractive return on
equity over time, built on an existing income return at NTA of 5.8% plus
future income growth. As we move to higher income, higher income growth and
lower cyclicality in returns, the delivery of our strategy is set to drive
significant shareholder value. Owning the right real estate has never been
more important.
Operating and portfolio review
Overview
We have created a high-quality, urban real estate portfolio which produces
£657m of annualised rental income and offers potential for material income
growth. This portfolio was valued at £10.9bn as of March and comprised the
following segments:
¾ Central London (62% by value): our well-connected, high-quality office
(85%) and retail and other commercial space (15%), principally focused on
multi-let assets in a small number of key areas in the West End (68%), City
(24%) and Southwark (8%).
¾ Major retail destinations (24%): our investments in seven shopping
centres and three retail outlets, c. 90% of which sit in the top 30 highest
selling retail destinations in the UK.
¾ Mixed-use urban neighbourhoods (7%): our investments in mixed-use urban
places in London and a small number of other major UK cities, with future
repositioning or residential development potential.
¾ Subscale (7%): assets in sectors where we have limited scale or
competitive advantage and which we therefore plan to divest over time, split
broadly equally between retail and leisure parks.
From FY26 onwards, we will align our financial reporting to our updated
strategy and operating model, with a split between Office-led (61%),
Retail-led (29%) and Residential-led (2%) places plus an element of residual
non-core assets (8%). A reconciliation will be provided separately, but this
report is based on the segmentation of how our portfolio was managed over the
past financial year.
Driving sustainable income growth
Our main focus is delivering sustainable income and EPS growth. In the long
run, valuation yields of real estate assets and P/E multiples in equity
markets are both broadly stable, which means that delivering sustainable
income and EPS growth, over time, will result in attractive return on equity
for shareholders.
Given the time it takes to develop and acquire or sell a meaningful share of
an £11bn property portfolio, in the next few years the majority of our income
growth will be driven by our existing portfolio, where the outlook is
positive. Our capital allocation decisions from here are about ensuring our
income growth prospects in 3-5 years are as attractive as they are for our
current portfolio today.
The strength of this has again been proven over the past twelve months.
Like-for-like net rental income was up 5.0%, with strong growth in both London
and retail. Occupancy increased 100bps on a like-for-like basis to a high
97.2% and we secured rental uplifts of 8% on relettings/renewal across the two
main parts of our portfolio. Overall ERVs were up 4.2%, underpinning future
income growth, and on a like-for-like basis, our gross to net margin was up
1.7ppt due to a reduction in service charge expense and operating costs as a
result of our focus on efficiencies.
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
Central London 275 6.6 1.2 92.0 0.7
Major retail 166 5.1 1.1 83.4 1.7
Mixed-use urban 43 2.8 0.9 79.6 4.4
Subscale sectors 68 0.0 0.4 94.4 2.2
Total Combined Portfolio 552 5.0 1.0 88.5 1.7
Central London
Customer demand for office space with the best sustainability credentials,
local amenities and transport connectivity continues to grow and given that
such space is in limited supply, rents continue to rise.
The appeal of our offer is reflected in the fact that we continue to see
growth in daily turnstile tap-ins in our buildings. The rate of growth will
naturally plateau as customers' space nears full capacity, yet the last three
months saw average daily tap-ins up 11% vs the prior year. Our customers are
now planning for c. 25% more space per person than they did five years ago, so
c. 80% of our lettings over the last twelve months have seen customers grow or
keep the same space.
Reflecting this, like-for-like occupancy increased 120bps to 98.0%,
significantly outperforming the London market as a whole at 91.9%. We
completed 42 lettings and renewals during the year, totalling £21m of rent,
on average 5% ahead of ERV, with a further £3m of lettings in solicitors'
hands, 22% above ERV. Uplifts on relettings/renewals were 10%, supporting 6.6%
LFL rental income growth, reflecting strong leasing results across a wide
range of assets and further income growth at Piccadilly Lights. ERVs were up
5.2%, so as our reversionary potential is now 12%, we expect continued growth
in rental income.
Our two established Myo flex office locations in Victoria and Liverpool Street
saw occupancy reduce from 90% to 79% in the first half due to a small number
of larger lease expiries, but in line with the view we set out at the half
year, occupancy has recovered to 90% since then. The lease-up of the four new
Myo locations we opened a year ago has taken slightly longer than expected,
but these are now 61% let or under offer, with a further 21% in negotiations
and rents on average 2% ahead of our underwrites.
Major retail destinations
The top 1% of all UK shopping destinations provide brands with access to c.30%
of the country's in-store, non-food retail spend, offering higher sales
densities and productivity than other formats. Around 90% of our retail assets
sit in this top 1%, which mean our destinations continue to materially
outperform, with total sales up 3.4% and footfall up 0.4%, well ahead of BRC
Benchmarks (-1.7% and -0.7% respectively).
As a result, we continue to see strong demand for our space, as brands focus
on 'fewer, bigger, better' stores. Examples of this over the past year are
deals with Next to triple the size of their existing store in Bluewater to
133,000 sq ft and Primark to double their store in White Rose from 37,000 to
71,000 sq ft; new openings of e.g. Bershka, Pull&Bear and Sephora at
Bluewater; and with JD Sports, who are moving into a major new store in St
David's from elsewhere in Cardiff city centre.
Over the past year, 17 brands increased their space with us, 30 new brands
opened in our centres and 45 existing brands opened stores in new locations
within our portfolio. This meant like-for-like occupancy increased 110bps to
96.6%, so occupancy is now higher than it was before the pandemic. We signed
201 leases totalling £26m of rent on average 8% above ERV, driving 4.0% ERV
growth for the year. Relettings and renewals for the year were 7% above
previous passing rent, up from 3% at the half year and 1% over the prior year.
This has risen further to 10% for deals in solicitors hands, underlining the
growing reversionary potential in our portfolio. As a result, like-for-like
net rental income increased 5.1%.
At the same time, on a like for like basis our leasing pipeline is up
meaningfully vs this time last year, with £12m of lettings in solicitors'
hands on average 20% ahead of ERV, and as our existing assets are nearly full
and new supply is non-existent, we expect this to drive continued growth in
rental income over time.
Mixed-use
After taking full control of MediaCity in October, we have already started to
deliver a turnaround in performance with a number of office lettings and new
F&B lettings, resulting in a 110bps increase in occupancy to 93.5%. We
recently appointed a CEO for MediaCity who joins from a senior media
background, and who will oversee the entire operations of the estate including
the studios business. This will allow us to further build on the growing
momentum and capitalise on the upside potential our new control offers us.
In other mixed-use, our previous approach to Buchanan Galleries in Glasgow and
our centres at Finchley Road and Lewisham in London was to manage each towards
a full vacant possession date to maximise development flexibility. This
naturally impacted income as leases were shortening, which in turn weighed on
values. We changed this approach last year in response to the higher interest
rate environment to focus more on retaining and improving the existing income,
which for Finchley Road and Lewisham will augment the major residential
opportunity at both sites. At Buchanan, we will build on this by focusing on
upgrading the existing retail space. This new asset management approach should
see income grow over time, which was up 2.8% for the year.
Subscale
Across our portfolio of retail and leisure parks, occupancy increased 40bps to
97.4%. We completed or are in solicitor's hands on £9m of lettings, on
average 2% below ERV. During the first half of the year, Cineworld announced a
restructuring plan which resulted in a rent reduction in five of their 13
cinemas in our portfolio. We took the opportunity to relet two of these to
other operators at higher rents so the combined impact on rental income was
minimal. Overall, like-for-like income on our retail and leisure parks was
flat, which was well short of the 5.1% increase at our major retail
destinations.
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 164 202 99.1 (0.6) 6.0
City offices 85 111 96.2 4.4 8.1
Retail and other 58 54 97.3 0.4 5.7
Developments - 85 n/a n/a n/a
Total Central London 307 452 98.0 1.2 6.5
Shopping centres 186 188 96.4 1.0 4.1
Outlets 48 52 97.4 1.4 2.8
Total Major retail 234 240 96.6 1.1 3.8
London 10 14 88.1 (2.1) 6.7
Major regional cities 37 49 95.2 2.1 5.3
Total Mixed-use urban 47 63 93.5 0.9 5.6
Leisure 44 41 98.2 1.2 10.0
Retail parks 25 27 96.4 (0.8) 5.5
Total Subscale sectors 69 68 97.4 0.4 8.2
Total Combined Portfolio 657 823 97.2 1.0 5.8
1. Excluding developments.
Acquisitions
We made £720m of acquisitions during the year, in line with our strategy to
grow our major retail platform and future residential optionality. The
majority of this was our acquisition of a 92% stake in Liverpool ONE for
£490m, which is one of the top retail destinations in the UK. £35m of the
consideration is deferred for two years at zero interest charge and with a
day-one net income return of 7.5% and rents which are reversionary and poised
to grow, we expect overall returns to be in the double digits. We invested
£120m in buying a further 17.5% stake in Bluewater at an income yield of 8.5%
and £19m in two smaller assets adjacent to our existing retail assets in
Cardiff and Glasgow, bringing total retail acquisitions to £629m.
Other acquisitions totalled £91m. This principally reflected the acquisition
of the remaining 25% interest in MediaCity from Peel, plus the 218-bed hotel
and studio operations at the estate which were wholly owned by Peel. The cash
consideration was £23m and we assumed £61m of debt, providing an overall
consideration of £84m. This represented a discount to the book value of our
existing stake, reflecting the value of future income from wrapper leases to
Peel we agreed to surrender. Adjusted for this, the deal was broadly in line
with book value and EPS neutral in the short term, but it enhances medium to
longer term EPS growth, as it provides us with full control to implement our
asset management plans for the existing estate, whilst the Phase 2 land has a
planning allocation to develop 2,700 homes. We also acquired £7m of assets
adjacent to our future residential schemes in Manchester and London.
Disposals
We sold £496m of assets during the year which did not fit our strategic
objectives and longer-term growth aspirations. On average, these disposals
reflected an effective net income yield of 7.5% and were 1% below their March
2024 book value. The largest disposal was our £400m hotel portfolio, which
had seen a strong recovery in performance post Covid, yet as the income was
100% turnover-linked on long-term leases to the operator of the hotels, there
was little opportunity for us to influence or enhance its future operational
performance. In addition, c. 70% of the hotels were more than 25 years old and
the portfolio was therefore expected to require significant capex in the near
future. The disposal included a deferred payment of £50m for up to two years,
for which we receive an annual 6% coupon.
We also sold a retail park in Taplow for £46m and a number of smaller
non-core assets for a combined £50m. Since the year-end, we have sold two
further retail parks for £143m, reflecting an average net rental income yield
of 6.4%, in line with book value. We expect to progress further disposals in
the near future, as we continue to recycle capital out of subscale sectors and
aim to monetise part of our capital employed in low-yielding pre-development
assets. Over the next 2-5 years, we aim to further rebalance our portfolio mix
by monetising c. £2bn of capital employed in offices.
Development and investments in existing assets
During the year, we invested £486m in capex, including £202m for our two
on-site office projects in Victoria and Southwark and £85m in pre-development
assets. As we plan to reduce our capital employed in pre-development assets by
half over the next three years, the latter is set to reduce over time. We
invested £199m in our existing portfolio, including £45m in the
refurbishment of 5 New Street Square where we agreed a new 17-year lease with
Taylor Wessing in 2023; £28m in repositioning traditional office space to Myo
flex space, which delivers a material uplift in income; £22m in our net zero
investment programme; and £14m in public realm improvements. The remainder
principally relates to leasing activity and accretive investment in retail
capex.
Current projects
Our two committed office developments are expected to complete over the next
twelve months and we are starting to see good customer interest emerge. We
expect this will translate into progress on pre-lets in the second half of the
year for both schemes, as high-quality, sustainable office space in locations
with good transport connectivity and attractive amenities remains in scarce
supply. However, as both schemes are designed to be multi-let, the majority of
lease-up is expected to occur post completion. At Thirty High in particular,
this enables us to capture a premium for the unique views this 30-storey West
End tower offers and with £61m of ERV, these two projects are expected to add
£7m to earnings once fully let based on current interest costs.
The completion of Thirty High has moved out a few months, but costs remain in
line with expectations. At Timber Square, building on the success at our n2
scheme in Victoria, we have added clubrooms to the original design which will
be accessible to all customers. This will drive additional rent, yet combined
with some design refinements and a sub-contractor insolvency, we reported at
the half year that overall costs had gone up £31m and the expected gross
yield on cost had reduced slightly from 7.1% to 7.0%. There have been no
further changes to costs in the second half.
Table 4: Committed pipeline
Project Sector Size Estimated completion Net income/ ERV Market value Costs to complete TDC Gross yield on TDC
date
£m
sq ft £m £m £m %
'000
Thirty High, SW1 Office 299 Q4 FY26 30 352 102 418 7.2%
Timber Square, SE1 Office 383 Q4 FY26 31 292 152 442 7.0%
Total 682 61 644 254 860 7.1%
Potential future pipeline
As part of our aim to invest a further £1bn into major retail destinations
over the next 1-3 years, we plan to progress a number of accretive investments
in our existing major retail assets, such as the creation of a new F&B
destination at Trinity, Leeds; the significant upsizes of Primark and Next at
White Rose and Bluewater; the repositioning of Buchanan Galleries in Glasgow;
and a new waterfront F&B offer at Gunwharf Quays. Total capex could be c.
£200m, spread over multiple smaller projects, with double-digit IRRs and a
blended yield on cost of around 10%.
In terms of larger development projects, our success in terms of planning over
the past two years means we now have more options to start new projects across
Central London offices or our major residential schemes in the next 12-24
months than we have the balance sheet capacity or risk appetite to
accommodate. In addition, we have a number of other development opportunities
outside of our core focus areas.
Table 5: Pre-development assets
Project Current capital employed Proposed sq ft Indicative TDC Indicative ERV Gross yield on TDC Potential Planning status
£m
start date
'000 £m %
Office-led
Red Lion Court, SE1 250 2026 Consented
Old Broad Street, EC2 290 2026 Consented
Liberty of Southwark, SE1 220 2026 Consented
Hill House, EC4 390 2026 Consented
Southwark Bridge Road, SE1 140 2026 Consented
Nova Place, SW1 60 2027 Design
Timber Square Phase 2, SE1 380 2027 Design
Total c. 370 1,730 2.4 170 7.1
Residential-led(1)
Mayfield, Manchester 1,800 0.9 2026 Consented
Finchley Road, NW3 1,400 1.2 2026 Consented
Lewisham, SE13 1,900 1.5 2027 Planning application
MediaCity Phase 2, Salford n/m n/m n/m Design
Total c. 260 5,100 3.6 200-260 6-7
Other opportunities c. 100 n/m Various
1. Indicative figures given multi-phased nature of schemes; subject to change
depending on final scope, planning and design
Our total capital employed in these pre-development assets is c. £730m yet
the current net income yield on this is minimal at c. 1%. As there is a clear
holding cost in maintaining this optionality for a prolonged period, we plan
to monetise around half of our capital employed over the next 1-3 years,
principally from office-led and other projects. This will add c. £15m to
earnings through reduced interest costs and improve our overall ROE by c.
25-50bps, taking into account lower capitalised pre-development costs.
Post the completion of our two existing office schemes, we will reduce our
office-led development activity by at least half compared to the average c.
£1bn committed TDC we have had over the last five years. From 2026, we plan
to shift development activity to residential, where we now have an attractive
pipeline of more than 6,000 homes across three schemes in Manchester and
London, which could deliver over £200m of annualised net rental income in the
next decade.
The first of our main residential projects is Finchley Road, in zone two
London, where we have outline consent for 1,800 homes and detailed planning
consent for the first 600 homes. We expect a decision on a variation to the
detailed consent in the second half of 2025. We have secured vacant possession
and completed the demolition and enabling works for the first phase, which
means we could start on site in late 2026. We expect a gross yield on cost of
close to 6.5%, which translates into a net yield after property operating
expenses of c. 4.8-5.0%, resulting in a c. 10-12% unlevered IRR.
At our residential-led scheme at Mayfield, adjacent to Manchester's main train
station, we agreed with our JV partners to optimise the development strategy
for this 24-acre site during the year. The site benefits from effective
outline consent in the form of a strategic regeneration framework and we have
submitted a detailed planning application for the first 879 homes, which we
expect a decision on in the second half of this year. We are working towards
the potential start of a c. £150m office block as part of the first phase of
development. Office demand in Manchester remains strong, with prime rents up
13% over the past two years. Whilst we would not pursue office development in
isolation, the returns on this look acceptable and, importantly, delivering
this would unlock the opportunity to invest c. £1bn in delivering c. 1,700
homes across multiple phases. The first residential phase could start in late
2026 with a gross yield on cost of c. 6.5-7.0% and net yield after direct
property costs of c. 5.0-5.5% is expected to deliver an unlevered IRR of c.
11-13%.
At Lewisham, south-east London, we submitted a planning application for our
new masterplan, which has the potential to deliver up to 1,700 homes with a
further 445 co-living homes and 660 student beds over the next decade across
multiple phases. The plans have been developed after substantial consultation
with local stakeholders, as a result of which our plans received ten times
more letters of support than objections. We expect a decision on our
application in the second half of this year. Given that we have vacant
possession flexibility for the first phase, this could allow for a start on
site in 2027. We expect a gross yield on cost of around 6.5%, which translates
into a net yield after direct property costs of c. 4.9-5.1%, resulting in a c.
10-12% unlevered IRR.
Across London, office space under construction is stable vs March 2024 at 13m
sq ft, of which c. 45% is pre-let or under offer. Whilst demand for space
remains good, the build cost inflation over the past few years, continued
challenges in supply chains and higher exit yields have put pressure on
development returns, despite growing rents. This impacts office development
more than residential, so we continue to carefully weigh risks and returns on
any new schemes, but in any case, we do not plan to commit to any new
speculative London office projects until we have secured the majority of the
£61m ERV on our existing projects.
Portfolio valuation
Successfully delivering on our objective to drive sustainable income growth
over time will underpin growth in property values in the long run, even though
in the short term valuations are also affected by changes in valuation yields.
Reflecting our successful leasing activity and the fact that property yields
stabilised, in line with the expectation we set out a year ago, the external
valuation of our portfolio was up 1.1%.
Our Central London portfolio was up 1.0%, driven by strong 5.2% growth in
ERVs, whilst valuation yields rose slightly. Developments were up 2.5%
reflecting ERV growth and a de-risking of our on-site schemes. The valuation
of our major retail portfolio was up 3.4%, reflecting a combination of 4.0%
ERV growth and 22bps yield compression. Combined with the high income return,
this again was best performing segment in our portfolio, with a 10.1% total
return for the year compared with Central London at 5.2% and mixed-use at
0.1%.
The value of our mixed-use assets was down 5.0% for the year, principally
reflecting a rise in valuation yields at MediaCity in the first half of the
year, although this stabilised in the second half. The shortening of income at
our three existing retail assets in Glasgow and London which previously had
been managed for flexibility for future redevelopment also weighed on values
in the first half yet this slowed in the second half, as our plans become more
tangible. The value of our retail parks was up 5.4%, principally driven by
yield compression. We have now sold c. 40% of this portfolio since the
year-end, on average in line with book value. The value of our leisure
portfolio was down slightly for the year, but stable in the second half.
We continue to see a steady pick-up in investor interest and activity in
London and major retail. As rents for the best assets continue to grow, yields
for such assets remain attractive in a historical context. Whilst we have not
seen any impact on investor appetite from the recent increase in global
economic uncertainty so far, we are mindful that the direction for long-term
interest rates and credit spreads will likely influence the pace at which
momentum continues to improve from here. As customer demand remains robust,
following our 4.2% growth in overall ERVs over the past twelve months, we
expect London and major retail ERVs to grow by a broadly similar rate this
year as they did over the last twelve months.
Table 6: Valuation overview
Market value Surplus / (Deficit) FY valuation change H2 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 3,124 17 0.6 0.5 5.2 4.6 5.4 5.4 14
City offices 1,445 20 1.4 0.0 7.5 4.2 5.1 6.2 13
Retail and other 1,022 (2) (0.2) 0.3 0.6 4.3 4.6 4.9 (2)
Developments 1,108 27 2.5 (0.4) n/a 0.0 0.0 5.3 n/a
Total Central London 6,699 62 1.0 0.2 5.2 4.4((2)) 5.2((2)) 5.5 12
Shopping centres 1,977 81 4.3 1.3 3.6 7.2 7.9 7.7 (31)
Outlets 626 4 0.5 0.8 5.1 6.3 6.3 6.9 (7)
Total Major retail 2,603 85 3.4 1.2 4.0 7.0 7.6 7.5 (22)
London 190 (18) (8.1) (2.7) 3.4 4.3 4.3 6.6 8
Major regional cities((3)) 599 (24) (4.0) (1.4) 1.7 6.6 6.5 8.2 47
Total Mixed-use urban 789 (42) (5.0) (1.7) 2.2 5.9((2)) 5.8((2)) 7.7 36
Leisure 423 (5) (1.2) (0.1) 1.3 7.8 8.1 8.8 (8)
Retail parks((4)) 366 19 5.4 (0.1) 1.1 6.1 6.3 6.7 (24)
Total Subscale sectors 789 14 1.8 (0.1) 1.2 7.0 7.2 7.7 (22)
Total Combined Portfolio 10,880 119 1.1 0.3 4.2 5.4((2)) 6.0((2)) 6.3 3
1. Rental value change excludes units materially altered during the period.
2. Excluding developments / land.
3. Includes owner-occupied property.
4. Includes non-current assets held-for-sale.
Growing in a sustainable way
We target to reduce direct and indirect greenhouse gas emissions by 47% by
2030 vs 2019/20, including all of our Scope 1 and 2 emissions and all of our
reported Scope 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 are currently on track, with a 23%
reduction vs this baseline so far.
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 we completed the first
retro-fit of air source heat pumps in an occupied building during the year at
Dashwood, so 56% of our portfolio is now rated EPC 'B' or higher, up from 49%
a year ago. We also installed almost 1,300 additional solar panels at Gunwharf
Quays, which combined with the already existing system will generate over
670,000 kWh per year, representing 23% of total landlord electricity demand.
We also continue to focus on reducing embodied carbon in development, with our
future pipeline tracking a 41% reduction vs the standard baseline. This is
principally achieved via relatively low-cost changes in design and retention
of existing structures, but there is a limit to how much of a further
reduction is economically achievable. Whilst there is clear evidence that
energy in use is important to customers and investors, there is no evidence
they are willing to pay a premium for buildings with less 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 18 interns and supported 13 real estate
bursaries. From our 2019/20 baseline, we have so far created £96m of social
value and empowered 14,737 people towards the world of work.
Financial review
Overview
We delivered solid financial results for the year. EPRA EPS was ahead of our
initial guidance due to our strong leasing activity and, in line with the view
we set out a year ago, valuations for our best-in-class assets returned to
growth, underpinning a positive return on equity. Meanwhile, our strong
capital base allowed us to take advantage of the opportunity to invest in a
number of rare, high-quality, accretive acquisitions, which will further
enhance future growth income and our overall return prospects.
With continued customer demand for our best-in-class space resulting in over
97% occupancy and positive rental uplifts on relettings and renewals,
like-for-like net rental income was up 5.0%, ahead of our increased guidance
at the half year. Despite continued inflation, overhead costs were down 5%, as
our continued focus on driving cost efficiencies more than offset inflation.
We see further upside on both fronts in the near future, underpinning a
positive outlook on EPS growth.
Our £23m like-for-like net rental income growth and £4m reduction in
overhead costs more than offset a small rise in finance costs, the impact from
net disposals during the period, and a reduction in surrender receipts, so
EPRA earnings were up £3m to £374m, or 50.3 pence per share. Our total
dividend for the year of 40.4 pence is up 2.0%, in line with our guidance of
low single digit percentage growth, and our dividend cover of 1.25x remains
comfortably within our target range of 1.2-1.3x on an annual basis.
Our successful leasing drove 4.2% growth in ERVs, which further enhances our
income growth potential and underpinned a 1.1% increase in the valuation of
our assets. This meant IFRS profit before tax was £393m and basic EPS was
53.3 pence, compared with a loss before tax of £341m in the prior year. EPRA
NTA per share was up 1.7% to 874 pence, so including dividends, our return on
equity was 6.4%.
All this remains underpinned by our clear commitment to retain a strong
balance sheet. Adjusted net debt increased from £3.5bn to £4.3bn,
principally due to our £455m investment in Liverpool ONE in December, but
this reduces to £4.1bn pro-forma for our £159m of disposals since the
year-end. Pro-forma for these, our LTV is 38.4% and our weighted average net
debt/EBITDA is 7.7x and we anticipate to make further disposals in the near
term. In September, we issued a £350m 10-year Green bond at a 4.625% coupon
and in October we refinanced £2.25bn revolving credit facilities at stable
margins, so our average debt maturity remains long, at 9.6 years. We have no
need to refinance any debt until 2027 and have £1.1bn of cash and undrawn
facilities.
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 £10.9bn, 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
Our primary focus is to deliver sustainable income and EPS growth as, over
time, it is sustainable growth in income and EPS which drives value growth in
real estate and equity markets. During the year, our high-quality portfolio
and strong leasing activity delivered strong like-for-like rental income
growth.
We have continued to reposition our portfolio to further enhance its long-term
return prospects, but as our main disposals were at the start of the year and
our principal acquisitions were towards the end of the period, the loss of
income for the year from the timing of these transactions was £24m. We also
saw a £14m reduction in surrender premiums vs 2024, yet despite this we
delivered a £2m increase in net rental income, principally driven by strong
like-for-like growth. Finance expenses increased slightly, but this was offset
by a reduction in administrative expenses so EPRA earnings of £374m were
ahead of the prior year, as expected, and ahead of our initial guidance for
the year.
Table 7: Income statement(1)
Year ended Year ended
31 March 2025
31 March 2024
Central London Major retail Mixed-use urban Subscale sectors Total Central London Major retail Mixed-use urban Subscale sectors Total Change
£m £m £m £m £m £m £m £m £m £m £m
Gross rental income(2) 299 199 54 72 624 291 181 57 112 641 (17)
Net service charge expense((3)) (2) (4) (4) (1) (11) (4) (7) (3) (2) (16) 5
Net direct property expenditure((3)) (23) (33) (12) (5) (73) (23) (31) (12) (15) (81) 8
Net other operating income - - 1 - 1 - - - - - 1
Movement in bad/doubtful debts provisions 1 4 4 2 11 (1) 8 - (1) 6 5
Segment net rental income 275 166 43 68 552 263 151 42 94 550 2
Net administrative expenses (73) (77) 4
EPRA earnings before interest 479 473 6
Net finance expense (105) (102) (3)
EPRA earnings 374 371 3
Capital/other items
Valuation surplus/(deficit) 107 (625) 732
Loss on disposals (18) (16) (2)
Impairment charges (26) (12) (13)
Fair value movement on interest rate swaps (38) (17) (21)
Other (6) (20) 14
Profit/(loss) before tax attributable to shareholders of the parent 393 (319) 712
Non-controlling interests - (22) 22
Profit/(loss) before tax 393 (341) 734
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. Current year balances reflect a reclassification of joint venture service
charge management fee income from net direct property expenditure to net
service charge expense of £3m. While the comparatives have not been restated,
the equivalent reclassification would have been £3m.
Net rental income
Our gross rental income was down £17m to £624m, principally reflecting the
timing difference between acquisitions and disposals, as outlined above, and
the fact that surrender receipts were £14m lower than in the prior year, at
£5m. We anticipate surrender receipts to remain limited in the future, given
lower levels of customer rightsizing or repurposing activity across our
portfolio. The release of bad and doubtful debt provisions was up £5m,
principally due to the recovery of outstanding debts on assets that were
previously managed externally and we now manage in house, so we expect this
level to reduce this year. The benefit of this broadly offset the fact that
surrenders were lower than our original guidance.
Reflecting the above, our overall net rental income was up £2m to £552m,
although on a like-for-like basis net rental income was up £23m, or 5.0%.
This was well ahead of our initial guidance for the year of similar growth as
the prior period's 2.8% and above our raised guidance at the half year of
growth being closer to 4%. This reflects our strong leasing, with increased
occupancy, positive uplifts on relettings and renewals, and growth in turnover
income, but also our focus on costs, as direct property costs reduced by £8m
and net service charge expenses were down £5m. Looking ahead, we expect to
like-for-like net rental income to grow by c. 3-4% in this financial year.
Our gross to net margin improved by 2.7ppt to 88.5%, which was well ahead of
our guidance, reflecting the growth in like-for-like income, our focus on
managing costs, and the increase in recovery of bad and doubtful debt
provisions, although we expect the benefit of the latter to reduce next year.
Table 8: Net rental income(1)
£m
Net rental income for the year ended 31 March 2024 550
Gross rental income like-for-like movement in the period(2):
Increase in variable and turnover-based rents 1
Operational performance 15
Total like-for-like gross rental income 16
Like-for-like net service charge expense 2
Like-for-like net direct property expenditure 5
Decrease in surrender premiums received (14)
Developments(2) 12
Acquisitions since 1 April 2023(2) 17
Disposals since 1 April 2023(2) (41)
Movement in bad/doubtful debts 5
Net rental income for the year ended 31 March 2025 552
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
Following a £7m reduction during the prior year, net administrative expenses
were down a further £4m to £73m last year, as our continued focus on
managing costs more than offset inflation, principally driven by
organisational changes and procurement savings. We implemented our new data
and tech systems late last year, so the material efficiency savings these will
deliver will mostly benefit future years. Alongside a further streamlining of
our resources and other savings, this means we expect net administrative
expenses to be well below £70m for FY26 and less than £65m for FY27, despite
the increase in national insurance costs and ongoing inflation.
The reduction in net administrative expenses and increase in gross to net
margin resulted in a 3.3ppt improvement in our EPRA cost ratio to 21.7%,
although 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
clearly does not mean they deliver better income or total returns. For us, it
is the overall net income return which matters, as that is what ultimately
drives value for shareholders.
Net finance expenses
Net interest costs increased by £3m to £105m, which reflected a small
increase in our weighted average cost of debt and higher adjusted net debt
following the acquisition of a 92% stake in Liverpool ONE in December. We
expect to reduce our net debt over the coming year from the level at March
2025 due to our planned capital recycling, but as our starting net debt for
the year is higher than it was last year, we still expect net finance expenses
for this financial year to be higher than last year.
Non-cash finance expense, which includes the fair value movements on
derivatives, caps and hedging and which is not included in EPRA earnings,
increased from a net expense of £23m in the prior year to £39m this year.
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 showed an
increase in value of £119m. Our continued strong leasing activity resulted in
4.2% ERV growth, and valuations yields were stable in both the first and
second half of the year. We continue to see investment activity picking up,
which we expect will continue to underpin values for those assets that can
generate income growth, although we are mindful that the pace at which
activity recovers further from here could well be influenced by any changes in
long-term interest rates.
IFRS loss after tax
Substantially all our activity during the year was covered by UK REIT
legislation, which means our tax charge for the period remained minimal. The
IFRS profit after tax of £396m reflects our continued strong income
performance and the positive fair value adjustment of our investment
portfolio. This compares with an IFRS loss after tax of £341m last year.
Net assets and return on equity
Including dividends paid, our total return on equity for the year was 6.4%,
compared with -4.0% for the prior year. The income component of this was 5.8%.
Movements in valuation yields reduced our overall return on equity by 0.8%,
but other valuation movements added 2.1%. Within this, the upside from ERV
growth was offset in part by an increased level of capex on pre-development
assets and a reduction in the value of QAM, as it is getting nearer the end of
its lease. We also recognised an element of goodwill write-off and provisions,
as detailed below, which reduced ROE by 0.7%, but these are not expected to
recur. Given our attractive income return and clear income growth, we are
well-placed to deliver attractive return on equity over time.
After the £297m of dividends paid, EPRA Net Tangible Assets, which reflects
the value of our Combined Portfolio less adjusted net debt, increased to
£6,530m, or 874 pence per share. This was up 1.7% vs the prior year. Our
strong operational performance supported a £119m valuation uplift across our
portfolio, yet this was partly offset by a number of items. In line with our
guidance at the half year, we wrote off £22m of goodwill which principally
arose from acquiring the studios business at MediaCity alongside our
acquisition of the remaining 25% stake of this estate, in line with our
practise to not carry any goodwill on our balance sheet. In addition, we saw a
£18m loss on disposals and we made a number of other small adjustments
impacting NTA in respect of certain transaction costs and property provisions
totalling £23m.
Table 9: Balance sheet(1)
31 March 2025 31 March 2024
£m £m
Combined Portfolio 10,880((2)) 9,963
Adjusted net debt (4,304) (3,517)
Other net assets/(liabilities) (46) (48)
EPRA Net Tangible Assets 6,530 6,398
Shortfall of fair value over net investment in finance leases book value 8 5
Other intangible assets 2 2
Excess of fair value over trading properties book value (27) (25)
Fair value of interest-rate swaps 1 22
Net assets, excluding amounts due to non-controlling interests 6,514 6,402
Net assets per share 877p 863p
EPRA Net Tangible Assets per share (diluted) 874p 859p
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 2024 6,398 859
EPRA earnings 374 50
Like-for-like valuation movement 75 10
Development valuation movement 22 3
Impact of acquisitions/disposals((2)) 22 3
Total valuation surplus 119 16
Dividends (297) (40)
Loss on disposals (18) (3)
Goodwill impairment (22) (4)
Other (24) (4)
EPRA Net Tangible Assets at 31 March 2025 6,530 874
1. Including our proportionate share of subsidiaries and joint ventures, as
explained in the Presentation of financial information above.
2. Includes owner-occupied property.
Net debt and leverage
Adjusted net debt, which includes our share of JV borrowings, was flat over
the first half of the year, but increased by £787m to £4,304m during the
second half. We spent £702m on acquisitions, most of which was in the second
half of the year, reflecting the 92% stake in Liverpool ONE and the residual
25% stake of MediaCity. We invested £486m in capex, including £202m for our
two on-site London office schemes, £45m in a significant office
refurbishment, £85m on pre-development assets, £28m for investments in Myo
flex office space, and £22m in net-zero investments. This was partly offset
by £446m of disposals, including our £400m hotel portfolio and other
non-core assets.
We expect our adjusted net debt to reduce over this financial year. Since the
year-end, we have already sold £159m of assets, which reduce adjusted net
debt to £4,145m on a pro-forma basis, and we expect further disposals in the
near future. We have £232m of committed capex remaining on our two London
office developments, which will complete at the end of this financial year. We
do not intend to commit to any new office-led developments until we have
secured the majority of income on these projects.
The other key elements behind the increase 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 2024 3,517
Adjusted net cash inflow from operating activities (260)
Dividends paid 305
Capital expenditure 486
Acquisitions 702
Disposals (446)
Adjusted net debt at 31 March 2025 4,304
1. Including our proportionate share of subsidiaries and joint ventures, as
explained in the Presentation of financial information above.
Net debt/EBITDA increased to 7.9x on a weighted average basis, which is more
representative than the 8.9x year-end position, as the latter includes the
full cost of the Liverpool ONE acquisition but only three months of income. We
expect average net debt/EBITDA to tick up slightly in the short term,
reflecting the fact that our two on-site developments are nearing the point of
full capital deployment but are not yet producing income, yet we target this
to be below 8x over time. All else equal, our objective to reduce our capital
employed in pre-development assets by half over the next 1-3 years will reduce
net debt/EBITDA by c. 0.7x.
We said at the half year that we expected our Group LTV, which includes our
share of JVs, to increase temporarily as we would aim to capitalise on
attractive acquisition opportunities, but to remain within our 25-40% target
range. With the acquisition of Liverpool ONE, LTV ended the year at 39.3%, but
as we have sold £159m of assets since the end of March, this has come down to
38.4% on a pro-forma basis since then, whilst net debt/EBITDA is down to 7.7x.
We expect LTV to reduce further towards the mid 30's as we recycle further
capital out of non-income producing development sites and non-core assets.
Table 12: Net debt and leverage
31 March 2025 31 March 2024
Net debt £4,341m £3,594m
Adjusted net debt(1) £4,304m £3,517m
Interest cover ratio 3.6x 3.9x
Net debt/EBITDA (period-end) 8.9x 7.4x
Net debt/EBITDA (weighted average) 7.9x 7.3x
Group LTV(1) 39.3% 35.0%
Security Group LTV 41.9% 37.0%
1. Including our proportionate share of subsidiaries and joint ventures, as
explained in the Presentation of financial information above.
Financing
We continued to strengthen our financial position during the year. In
September, we issued a £350m Green Bond with a maturity of 10 years at
4.625%, representing a spread of 97bps over the reference gilt yield. In
October, we put in place £2,250m of revolving credit facilities to replace
facilities that were due to expire across 2025-27. The new facilities are
split evenly across two tenors of 3+1+1 and 5+1+1 years, to spread refinancing
dates, and on average have the same margin as the facilities they replaced.
Both transactions underline the strength of our credit profile and ensure our
overall debt maturity remains long, at 9.6 years, providing clear visibility
and underpinning the resilience of our attractive earnings profile. We had
£1.1bn of cash and undrawn facilities at the end of March 2025, providing
substantial flexibility, and no refinancing needs until FY27. Our debt is 91%
fixed or hedged and our average cost of debt was up marginally to 3.4%. We
expect this to increase slightly in the current year.
Our gross borrowings of £4,396m are diversified across various sources,
including £2,868m of Medium Term Notes (MTNs), £778m of syndicated and
bilateral bank loans and £750m 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 £10.0bn. This structure provides
flexibility to include or exclude assets, and an attractive cost of funding,
with our MTNs currently rated AA and AA- with a stable outlook respectively 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. 60% before we reach the 1.45x ICR threshold and c. 72% before
reaching 1.0x ICR.
Table 13: Available facilities(1)
31 March 2025 31 March 2024
£m £m
Medium Term Notes 2,868 2,607
Drawn bank debt 778 415
Outstanding commercial paper 750 681
Cash and available undrawn facilities 1,101 1,889
Total committed credit facilities 2,590 2,907
Weighted average maturity of debt((1)) 9.6 years 9.5 years
Percentage of borrowings fixed or hedged((2)) 91% 94%
Weighted average cost of debt((3)) 3.4% 3.3%
1. Assuming the extensions on both RCF tranches are executed; 8.9 years
excluding this.
2. Calculated as fixed rate debt and hedges over gross debt based on the
nominal values of debt and hedges.
3. Including amortisation and commitment fees; excluding this the weighted
average cost of debt is 3.3% at 31 March 2025.
Financial summary
In summary, the high quality portfolio we have created over the past few years
continues to benefit from strong customer demand, so we expect our strong
operational performance to persist. Reflecting this, we expect like-for-like
net rental income for this year to increase by c. 3-4% and we also anticipate
a further reduction in overhead cost. We expect this to more than offset an
increase in interest expenses and the fact that we are unlikely to have the
same benefit of the recovery of outstanding debts on assets that were
previously managed externally that we had last year.
Overall, we expect EPRA EPS to grow by c. 2-4% this year. This is on track
with the c. 20% EPS growth potential we see by FY30 as we execute our strategy
and is expected to drive further growth in dividends, in line with our
1.2-1.3x target cover. As our capital base remains strong, we are well-placed
to deliver significant shareholder value over time.
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 ten
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 ten
principal risks, with explanations of changes in the risk profile across the
year. Changes to our principal risks from half-year have been minor, with
consideration given to the impact of our updated strategy and recent
acquisition activity alongside a backdrop of growing geopolitical risk.
Whilst we are mindful that, in general, economic uncertainty could impact
business decision-making, we are not yet seeing any signs of a slowdown in
customer demand and Landsec has positioned itself strongly to take advantage
of future opportunities.
Risk description Change in year
Macroeconomic outlook ó
Changes in the macro-economic environment result in reduction in demand for We are mindful of the disruption to global economic conditions caused by the
space or deferral of decisions by retail and office occupiers. Due to the imposition of US trade tariffs in recent months, and the overall risk remains
length of build projects, the prevailing economic climate at initiation may be high. However, as a purely UK-focused business, with a strong customer base,
vastly different from that at completion. we have yet to see any impact to our operational performance.
Long-term interest rates and higher finance costs will remain a risk area for
our business, but we maintain a positive outlook for our operational
performance, and this should drive earnings growth and underpin valuations
going forward.
The risk score has remained stable over the period and continues to be within
the defined risk appetite.
Office occupier market ñ
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 and an increasing social preference for office
the risk encompasses the inability to identify or adapt to changing markets in working.
a timely manner.
However, we are mindful of the significant leasing activity associated with
our two existing office projects due to complete within the next twelve
months. We would expect leasing activity to increase as we approach the
completion date of these developments.
As a result, whilst the gross risk has remained stable, the net risk is
assessed to have risen at year-end. Nevertheless, the residual risk 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 for the wider retail and hospitality market. However, our strategy focuses
values. 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 ñ
Capital allocated to specific assets, sectors or locations does not yield the Following the acquisition of Liverpool ONE, leverage is towards the top end of
expected returns i.e. we are not effective in placing capital or recycling. our target range and our continued focus on disposal activity - including
£0.8bn of non-core assets - is expected to reduce it in line with our
Strategic and Business Plans.
As these disposals take place the net risk is expected to reduce.
Nevertheless, the residual risk remains within the defined risk appetite.
Development ñ
We may be unable to generate expected returns as a result of changes in the The market risk is considered to have marginally increased during the year due
occupier market for a given asset during the course of the development, or to the persistence of build cost inflation, continued challenges in supply
cost or time overruns on the scheme. chains and an increase in exit yields in recent years which are putting
pressure on development returns.
However, as the majority of the development costs of our committed schemes are
fixed and/or nearing completion, this risk is primarily a consideration for
our future development projects where we have the flexibility to manage the
scale and timing of our activity.
The risk is considered to be within risk appetite.
Information security and cyber threat ó
Data loss or disruption to business processes, corporate systems or The cyber threat landscape is always evolving, with sophisticated ransomware
building-management systems resulting in a negative reputational, operational, attacks, data breaches, and AI-driven scams becoming increasingly common. With
regulatory or financial impact. hackers exploiting vulnerabilities in cloud systems, supply chains and
employee behaviours, 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.
Change projects ó
Landsec is engaging in a number of important internal change programmes. These Following the implementation of two major change projects during the year -
projects aim to deliver important benefits, both operationally and culturally. including the upgrade and improvement of our financial system, the gross risk
There is a risk that these projects fail to deliver the benefits identified in is considered to have reduced as our focus shifts to embedding and optimising
a timely manner and to budget. these change programmes within our structure.
The net risk has remained stable and within our 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 ISO45001 and BS 9997 certifications
incidents, leading to: through independent audits, reflecting our commitment to safety and
compliance. Our focus remained on reducing significant occupational-safety
- Serious injury, illness or loss of life risks and prioritising fire safety to meet legislative requirements, including
the Building Safety Act.
- Criminal/civil proceedings
- Loss of stakeholder confidence
The likelihood of a major health, safety or security incident has remained
- Delays to building projects and access restrictions to our properties constant throughout the year and within appetite.
resulting in loss of income
- Inadequate response to regulatory changes
- Reputational impact
People and skills ñ
Inability to attract, retain and develop the right people and skills to meet It is considered that this risk has temporarily increased following the
our strategic objectives, grow enterprise value and meet shareholder integration of Liverpool ONE and Media City and the evolution of our strategy,
expectations. however it is expected to return to 2024 levels as our Strategy and Business
Plans are embedded during the financial year.
The risk remains within our risk appetite.
Climate-change transition ó
Climate change risk has two elements: Despite no change in the net risk position, gross risk has decreased due to
targeted portfolio improvements, such as air source heat pump feasibility
- Our near and long-term science-based carbon reduction targets by 2030 and studies and our plans to scale down office developments which we anticipate
2040 are not met in time or are achieved at a significantly higher cost than will reduce our exposure to embodied carbon.
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 Operational and supply chain challenges affecting sustainable resources remain
an inability to service market demand for high-quality assets that meet the under review, with the net risk position stable and just below our Cautious
highest environmental and wellbeing standards. risk appetite target.
Statement of Directors' Responsibilities
The Annual Report 2025 will contain the following statements regarding
responsibility for the financial statements and business reviews included
therein.
The Directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors have prepared the Group and the
Company financial statements in accordance with the requirements of the
Companies Act 2006. Under the Financial Conduct Authority's Disclosure
Guidance and Transparency Rules and Company law, group financial statements
are required to be prepared in accordance with UK adopted international
accounting standards (IFRSs and IFRICs). Directors must not approve the
financial statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and the Company and of the profit
and loss of the Group and the Company for that period.
In preparing these financial statements, the Directors are required to:
¾ select suitable accounting policies in accordance with IAS 8
'Accounting Policies, Changes in Accounting Estimates and Errors' and then
apply them consistently;
¾ make judgements and accounting estimates that are reasonable and
prudent;
¾ present information, including accounting policies, in a manner that
provides relevant, reliable, comparable and understandable information;
¾ in respect of the Group financial statements, state whether
international accounting standards in conformity with the requirements of the
Companies Act 2006 (and UK adopted international accounting standards) have
been followed, subject to any material departures disclosed and explained in
the financial statements;
¾ in respect of the Company financial statements, state whether
international accounting standards in conformity with the requirements of the
Companies Act 2006 have been followed, subject to any material departures
disclosed and explained in the financial statements;
¾ provide additional disclosures when compliance with the specific
requirements of UK adopted international accounting standards is insufficient
to enable users to understand the impact of particular transactions, other
events and conditions on the Group's and Company's financial position and
performance; and
¾ prepare the Group's and Company's financial statements on a going
concern basis, unless it is inappropriate to do so.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group's and Company's transactions and
disclose with reasonable accuracy at any time the financial position of the
Group and the Company, and to enable them to ensure that the Annual Report
complies with the Companies Act 2006 and as regards the Group financial
statements, Article 4 of the IAS regulation. They are also responsible for
safeguarding the assets of the Group and the Company and hence for taking
reasonable steps for the prevention and detection of fraud and other
irregularities.
Directors' responsibility statement under the Disclosure and Transparency
Rules
Each of the Directors, whose names and functions appear below, confirm to the
best of their knowledge:
¾ the Group financial statements, which have been prepared in
accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006 (and UK adopted international
accounting standards)
¾ give a true and fair view of the assets, liabilities, financial
position, performance and cash flows of the Company and Group as a whole; and
¾ the Strategic Report contained in the Annual Report includes a fair
review of the development and performance of the business and the position of
the Group and the Company, together with a description of the principal risks
and uncertainties faced by the Group and Company.
Directors' statement under the UK Corporate Governance Code
Each of the Directors confirm that to the best of their knowledge the Annual
Report taken as a whole is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Group's and Company's
position, performance, business model and strategy.
A copy of the financial statements of the Group is placed on the Company's
website. The Directors are responsible for the maintenance and integrity of
statutory and audited information on the Company's website at landsec.com.
Information published on the internet is accessible in many countries with
different legal requirements. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
The Directors of Land Securities Group PLC as at the date of this announcement
are as set out below:
¾ Sir Ian Cheshire, Chair*
¾ Mark Allan, Chief Executive
¾ Vanessa Simms, Chief Financial Officer
¾ Moni Mannings, Senior Independent Director*
¾ James Bowling*
¾ Michael Campbell*
¾ Baroness Louise Casey*
¾ Madeleine Cosgrave*
¾ Christophe Evain*
¾ Miles Roberts*
¾ Manjiry Tamhane*
*Non-executive Directors
The Statement of Directors' Responsibilities was approved by the Board of
Directors on 15 May 2025 and is signed on its behalf by:
Mark Allan
Vanessa Simms
Chief Executive Chief Financial
Officer
Financial statements
Income statement Year ended Year ended
31 March 2025
31 March 2024
EPRA earnings Capital and other items Total EPRA earnings Capital and other items Total
Notes £m £m £m £m £m £m
Revenue 5 797 45 842 766 58 824
Costs 6 (352) (77) (429) (325) (84) (409)
445 (32) 413 441 (26) 415
Share of post-tax profit/(loss) from joint ventures 12 23 14 37 21 (19) 2
Loss on disposal of investment properties - (15) (15) - (16) (16)
Net surplus/(deficit) on revaluation of investment properties 10 - 91 91 - (628) (628)
Operating profit/(loss) 468 58 526 462 (689) (227)
Finance income 7 15 - 15 11 1 12
Finance expense 7 (109) (39) (148) (102) (24) (126)
Profit/(loss) before tax 374 19 393 371 (712) (341)
Taxation 3 -
Profit/(loss) for the year 396 (341)
Attributable to:
Shareholders of the parent 396 (319)
Non-controlling interests - (22)
396 (341)
Profit/(loss) per share attributable to shareholders of the parent:
Basic earnings/(loss) per share 4 53.3p (43.0)p
Diluted earnings/(loss) per share 4 53.0p (43.0)p
Statement of comprehensive income Year ended Year ended
31 March 2025
31 March 2024
Total Total
£m £m
Profit/(loss) for the year 396 (341)
Items that may be subsequently reclassified to the income statement:
Movement in cash flow hedges - (1)
Net surplus on revaluation of owner-occupied property 12 -
Deferred tax charge on owner-occupied property revaluation surplus (3) -
Items that will not be subsequently reclassified to the income statement:
Net remeasurement loss on defined benefit pension scheme - (5)
Deferred tax credit on remeasurement above - 4
Other comprehensive income/(loss) for the year 9 (2)
Total comprehensive income/(loss) for the year 405 (343)
Attributable to:
Shareholders of the parent 405 (321)
Non-controlling interests - (22)
405 (343)
Balance sheet
2025 2024
Notes £m £m
Non-current assets
Investment properties 10 10,034 9,330
Property, plant and equipment 42 7
Intangible assets 3 3
Net investment in finance leases 19 21
Investments in joint ventures 12 551 529
Investments in associates - -
Trade and other receivables 229 159
Other non-current assets 22 41
Total non-current assets 10,900 10,090
Current assets
Trading properties 11 81 100
Trade and other receivables 467 379
Monies held in restricted accounts and deposits 15 20 6
Cash and cash equivalents 16 39 78
Other current assets 4 11
Non-current asset held for sale 17 110 -
Total current assets 721 574
Total assets 11,621 10,664
Current liabilities
Borrowings 14 (752) (975)
Trade and other payables (406) (348)
Provisions (44) (30)
Other current liabilities (6) -
Total current liabilities (1,208) (1,353)
Non-current liabilities
Borrowings 14 (3,802) (2,805)
Trade and other payables (44) (4)
Provisions (30) (42)
Other non-current liabilities (5) (13)
Total non-current liabilities (3,881) (2,864)
Total liabilities (5,089) (4,217)
Net assets 6,532 6,447
Equity
Capital and reserves attributable to shareholders
Ordinary shares 80 80
Share premium 319 319
Other reserves 30 23
Retained earnings 6,085 5,980
Equity attributable to shareholders of the parent 6,514 6,402
Equity attributable to non-controlling interests 18 45
Total equity 6,532 6,447
The financial statements on pages 29 to 50 were approved by the Board of
Directors on 15 May 2025 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 Retained earnings Non-controlling interests Total
equity
Total
Notes £m £m £m £m £m £m £m
At 1 April 2023 80 318 13 6,594 7,005 67 7,072
Total comprehensive loss for the financial year - - - (321) (321) (22) (343)
Transactions with shareholders of the parent:
Share-based payments - 1 10 (2) 9 - 9
Dividends paid to shareholders of the parent 8 - - - (291) (291) - (291)
Total transactions with shareholders of the parent - 1 10 (293) (282) - (282)
At 31 March 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
Statements of cash flows
2025 2024
Notes £m £m
Cash flows from operating activities
Net cash generated from operations 9 381 429
Interest received 23 24
Interest paid (144) (101)
Rents paid (12) (14)
Capital expenditure on trading properties (8) (19)
Disposal of trading properties 13 18
Other operating cash flows 3 1
Net cash inflow/(outflow) from operating activities 9 256 338
Cash flows from investing activities
Investment property development expenditure (293) (202)
Other investment property related expenditure (163) (126)
Acquisition of investment properties, net of cash acquired (325) (137)
Acquisition of subsidiaries, net of cash acquired (18) -
Disposal of investment properties 404 176
Cash distributions from joint ventures 12 12 17
Net cash outflow from investing activities (383) (272)
Cash flows from financing activities
Net proceeds from new borrowings (net of finance fees) 14 963 708
Net repayment of borrowings 14 (562) (427)
Net cash outflow from derivative financial instruments 14 (6) (18)
Proceeds from non-controlling interest share capital issuance 12 -
Dividends paid to shareholders of the parent (305) (291)
Dividends paid to non-controlling interests (1) -
Increase in monies held in restricted accounts and deposits (14) (2)
Other financing cash flows 1 1
Net cash inflow/(outflow) from financing activities 88 (29)
(Decrease)/increase in cash and cash equivalents for the year (39) 37
Cash and cash equivalents at the beginning of the year 78 41
Cash and cash equivalents at the end of the year 16 39 78
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 15 May 2 025, 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 2024 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 2025 is based on, and consistent
with, the financial information in the Group's audited financial statements
for the year ended 31 March 2024. 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 2024 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 2025. The
Group's going concern assessment considers changes in the Group's principal
risks (see pages 24-26) 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 macro-economic 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 2026, are shown below alongside the actual position at 31 March
2025.
Key metrics Mitigated downside scenario
31 March 2025 30 September 2026
Security Group LTV 41.9% 45.8%
Adjusted net debt £4,304m £4,769m
EPRA net tangible assets £6,530m £5,940m
Available financial headroom £1.1bn £0.7bn
In our mitigated downside scenario, the Group has sufficient cash reserves,
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 29% from the sensitised values forecasted at
30 September 2026 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 2025
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 £259m
in the full year ending 31 March 2026 and at least £146m in the six month
period ending 30 September 2026 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 2025 are well above the level
required to meet the interest cover covenant for the year ended 31 March 2026.
The Directors do not anticipate a reduction in Security Group earnings over
the period ending 30 September 2026 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 2025.
Basis of consolidation and presentation of results
The consolidated financial statements for the year ended 31 March 2025
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 income statement.
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 £10.9bn, 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 1 - Classification of liabilities as current or non
current and Non-current Liabilities with Covenants
- Amendments to IFRS 16 - Lease liability in a sale and leaseback
- Amendments to IAS 7 and IFRS 7 - Disclosures: Supplier finance
arrangements
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:
- Amendments to IFRS 10 and IAS 28 - Sale or contribution of assets
between an investor and its associate or joint venture
- Amendments to IAS 21 - Lack of exchangeability
- IFRS 18 - Presentation and Disclosure in Financial Statements
- Amendments to IFRS 7 and IFRS 9 - Classification and measurement of
financial instruments and for Power Purchase Agreements
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 Central London, Major retail destinations (Major retail),
Mixed-use urban neighbourhoods (Mixed-use urban) and Subscale sectors.
The Central London segment includes all assets geographically located within
central London. Major retail destinations includes all regional shopping
centres and shops outside London and our outlets. The Mixed-use urban segment
includes those assets where we see the most potential for capital investment.
Subscale sectors mainly includes assets that will not be a focus for capital
investment and consists of leisure assets, retail parks and previously hotel
assets which were disposed during the current financial year.
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
2025 2024(2)
EPRA earnings Central London Major retail Mixed-use urban Subscale sectors Total Central London Major Mixed-use urban Subscale sectors Total
retail
£m £m £m £m £m £m £m £m £m £m
Rental income 302 207 54 72 635 294 188 58 112 652
Finance lease interest - - - 1 1 - - - 1 1
Gross rental income (before rents payable) 302 207 54 73 636 294 188 58 113 653
Rents payable(1) (3) (8) - (1) (12) (3) (7) (1) (1) (12)
Gross rental income (after rents payable) 299 199 54 72 624 291 181 57 112 641
Service charge income((3)) 67 70 18 10 165 59 53 11 - 123
Service charge expense (69) (74) (22) (11) (176) (63) (60) (14) (2) (139)
Net service charge expense (2) (4) (4) (1) (11) (4) (7) (3) (2) (16)
Other property related income((3)) 23 8 4 1 36 20 11 4 3 38
Direct property expenditure (46) (41) (16) (6) (109) (43) (42) (16) (18) (119)
Other operating income - - 10 - 10 - - - - -
Other operating expense - - (9) - (9) - - - - -
Movement in bad and doubtful debts provision 1 4 4 2 11 (1) 8 - (1) 6
Segment net rental income 275 166 43 68 552 263 151 42 94 550
Other income 1 1
Administrative expense (71) (74)
Depreciation (3) (4)
EPRA earnings before interest 479 473
Finance income 15 11
Finance expense (109) (102)
Joint venture net finance expense (11) (11)
EPRA earnings attributable to shareholders of the parent 374 371
1. Included within rents payable is lease interest payable of £8m (2024:
£4m) across the four segments.
2. A reconciliation from the Group income statement to the information
presented in the segmental results table for the year ended 31 March 2024 is
included in table 26.
3. Current year balances reflect a reclassification of joint venture service
charge management fee income from other property related income to service
charge income of £3m. While the comparatives have not been restated, the
equivalent reclassification would have been £3m.
The following table reconciles the Group's income statement to the segmental
results.
Reconciliation of segmental information note to statutory reporting
Year ended 31 March 2025
Group income statement Joint Adjustment for non-wholly owned subsidiaries(2) Total EPRA earnings Capital and other items
£m ventures(1) £m £m £m £m
£m
Rental income 600 39 (4) 635 635 -
Finance lease interest 1 - - 1 1 -
Gross rental income (before rents payable) 601 39 (4) 636 636 -
Rents payable (11) (1) - (12) (12) -
Gross rental income (after rents payable) 590 38 (4) 624 624 -
Service charge income((4)) 155 11 (1) 165 165 -
Service charge expense (165) (12) 1 (176) (176) -
Net service charge expense (10) (1) - (11) (11) -
Other property related income((4)) 35 2 (1) 36 36 -
Direct property expenditure (104) (6) 1 (109) (109) -
Other operating income 10 - - 10 10 -
Other operating expense (9) - - (9) (9) -
Movement in bad and doubtful debts provision 9 2 - 11 11 -
Segment net rental income 521 35 (4) 552 552 -
Other income 1 - - 1 1 -
Administrative expenses (71) - - (71) (71) -
Depreciation, including amortisation of software (3) - - (3) (3) -
EPRA earnings before interest 448 35 (4) 477 479 -
Share of post-tax profit/(loss) from joint ventures 37 (37) - - - -
(Loss)/profit on disposal of investment properties(3) (15) 3 - (12) - (12)
Loss on disposal of trading properties (6) - - (6) - (6)
Net surplus on revaluation of investment properties 91 13 3 107 - 107
Net development contract and transaction income/ (expenditure) 3 (2) - 1 - 1
Reversal of impairment of amounts due from joint ventures 1 - - 1 - 1
Impairment of goodwill (22) - - (22) (22)
Impairment of trading properties (4) - - (4) - (4)
Depreciation (1) - - (1) - (1)
Other costs (6) (1) - (7) - (7)
Operating profit/(loss) 526 11 (1) 536 479 57
Finance income 15 - - 15 15 -
Finance expense (148) (11) 1 (158) (120) (38)
Profit before tax 393 - - 393 374 19
Taxation 3 - - 3
Profit for the year 396 - - 396
1. Reallocation of the share of post-tax profit from joint ventures reported
in the Group income statement to the individual line items reported in the
segmental results table.
2. Removal of the non-wholly owned share of results of the Group's
subsidiaries. The non-wholly owned subsidiaries are consolidated at 100% in
the Group's income statement, but only the Group's share is included in EPRA
earnings reported in the segmental results table. The non-owned element of the
Group's subsidiaries are included in the 'Capital and other items' column
presented in the Group's income statement, together with items not directly
related to the underlying rental business such as investment properties
valuation changes, profits or losses on the disposal of investment properties,
the proceeds from, and costs of, the sale of trading properties, income from
and costs associated with development contracts, amortisation and impairment
of intangibles, and other attributable costs, arising on business
combinations.
3. Included in the loss on disposal of investment properties is a £1m charge
(2024: £2m charge) related to the provision for fire safety remediation works
on properties no longer owned by the Group but for which the Group is
responsible for remediating under the Building Safety Act 2022.
4. Current year balances reflect a reclassification of joint venture service
charge management fee income from other property related income to service
charge income of £3m. While the comparatives have not been restated in table
26, the equivalent reclassification would have been £3m.
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 return on equity. 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 2025
31 March 2024
Profit for the year EPRA earnings Loss for the year EPRA earnings
£m £m £m £m
Profit/(loss) attributable to shareholders of the parent 396 396 (319) (319)
Valuation and loss on disposals - (84) - 650
Net finance expense (excluded from EPRA earnings) - 39 - 20
Impairment of goodwill - 22 - 1
Taxation - (3) - -
Other - 4 - 19
Profit/(loss) used in per share calculation 396 374 (319) 371
IFRS EPRA IFRS EPRA
Basic earnings/(loss) per share 53.3p 50.3p (43.0)p 50.1p
Diluted earnings/(loss) per share(1) 53.0p 50.1p (43.0)p 50.1p
1. In the year ended 31 March 2024, share options are excluded from the
weighted average diluted number of shares when calculating IFRS and EPRA
diluted (loss)/earnings per share because they are not dilutive.
Net assets per share 31 March 2025 31 March 2024
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 6,514 6,514 6,514 6,402 6,402 6,402
Shortfall of fair value over net investment in finance leases book value - (8) (8) - (5) (5)
Other intangible asset - - (2) - - (2)
Fair value of interest-rate swaps - - (1) - - (22)
Excess of fair value of trading properties over book value - 27 27 - 25 25
Shortfall of fair value of debt over book value (note 14) - 334 - - 313 -
Net assets used in per share calculation 6,514 6,867 6,530 6,402 6,735 6,398
IFRS EPRA NDV EPRA NTA IFRS EPRA NDV EPRA NTA
Net assets per share 877p n/a n/a 863p n/a n/a
Diluted net assets per share 872p 919p 874p 859p 904p 859p
Number of shares 2025 2024
Weighted average 31 March Weighted average 31 March
million million million million
Ordinary shares 752 752 751 752
Treasury shares (7) (7) (7) (7)
Own shares (2) (2) (3) (3)
Number of shares - basic 743 743 741 742
Dilutive effect of share options 4 4 3 3
Number of shares - diluted 747 747 744 745
Total return on equity 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 return on equity over the year.
Total return on equity based on EPRA NTA Year ended Year ended
31 March 2025
31 March 2024
pence pence
Increase/(decrease) in EPRA NTA per share 15 (77)
Dividend paid per share in the year (note 8) 40 39
Total return (a) 55 (38)
EPRA NTA per share at the beginning of the year (b) 859 936
Total return on equity (a/b) 6.4% (4.0)%
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.
2025 2024
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) 563 4 567 598 8 606
Adjustment for lease incentives 33 - 33 16 - 16
Rental income 596 4 600 614 8 622
Service charge income((1)) 154 1 155 115 2 117
Trading property sales proceeds - 22 22 - 26 26
Other property related income((1)) 34 1 35 35 - 35
Finance lease interest 1 - 1 1 - 1
Development contract and transaction income - 17 17 - 22 22
Other operating income 10 - 10 - - -
Other income 2 - 2 1 - 1
Revenue per the income statement 797 45 842 766 58 824
The following table reconciles revenue per the income statement to the
individual components of revenue presented in note 3.
2025 2024
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 600 39 (4) 635 622 38 (8) 652
Service charge income((1)) 155 11 (1) 165 117 8 (2) 123
Other property related income((1)) 35 2 (1) 36 35 3 - 38
Finance lease interest 1 - - 1 1 - - 1
Other operating income 10 - - 10 - - - -
Other income 2 - (1) 1 1 - - 1
Revenue in the segmental information note 803 52 (7) 848 776 49 (10) 815
Development contract and transaction income 17 - - 17 22 - - 22
Trading property sales proceeds 22 - - 22 26 - - 26
Revenue including Capital and other items 842 52 (7) 887 824 49 (10) 863
1. Current year balances reflect a reclassification of joint venture service
charge management fee income from other property related income to service
charge income of £3m. While the comparatives have not been restated, the
equivalent reclassification would have been £3m.
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.
2025 2024
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 164 1 165 130 3 133
Direct property expenditure 103 1 104 113 1 114
Movement in bad and doubtful debts provision (9) - (9) (6) - (6)
Administrative expenses 71 - 71 73 - 73
Impairment of trading properties - 4 4 - 11 11
Cost of trading property disposals - 28 28 - 26 26
Development contract and transaction expenditure - 14 14 - 40 40
Depreciation, including amortisation of software 3 1 4 4 2 6
(Reversal)/impairment of amounts due from joint ventures - (1) (1) - 2 2
Impairment of goodwill - 22 22 - 1 1
Fair value gain on remeasurement of investment - - - - (3) (3)
Other operating expense 9 - 9 - - -
Other costs - 7 7 - 1 1
Total costs per the income statement 352 77 429 325 84 409
The following table reconciles costs per the income statement to the
individual components of costs presented in note 3.
2025 2024
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 165 12 (1) 176 133 9 (3) 139
Direct property expenditure 104 6 (1) 109 114 6 (1) 119
Administrative expenses 71 - - 71 73 1 - 74
Depreciation, including amortisation of software 3 - - 3 4 - - 4
Movement in bad and doubtful debts provision (9) (2) - (11) (6) - - (6)
Costs in the segmental information note 345 17 (2) 360 329 17 (4) 342
Impairment of trading properties 4 - - 4 11 - - 11
Cost of trading property disposals 28 - - 28 26 - - 26
Development contract and transaction expenditure 14 2 - 16 40 - - 40
Depreciation 1 - - 1 2 - - 2
(Reversal)/impairment of amounts due from joint ventures (1) - - (1) 2 - - 2
Impairment of goodwill 22 - - 22 1 - - 1
Fair value gain on remeasurement of investment - - - - (3) - - (3)
Other operating expense 9 9
Other costs 7 - - 7 1 - - 1
Costs including Capital and other items 429 19 (2) 446 409 17 (4) 422
7. Net finance expense
2025 2024
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 11 - 11 11 - 11
Other interest receivable 4 - 4 - 1 1
15 - 15 11 1 12
Finance expense
Bond and debenture debt (101) - (101) (85) - (85)
Bank and other short-term borrowings (36) (5) (41) (35) (2) (37)
Fair value movement on derivatives - (34) (34) - (22) (22)
Other interest payable - - - (1) - (1)
(137) (39) (176) (121) (24) (145)
Interest capitalised in relation to properties under development 28 - 28 19 - 19
(109) (39) (148) (102) (24) (126)
Net finance expense (94) (39) (133) (91) (23) (114)
Joint venture net finance expense (11) (11)
Net finance expense included in EPRA earnings (105) (102)
Lease interest payable of £8m (2024: £4m) is included within rents payable
as detailed in note 3.
8. Dividends
Dividends paid Year ended 31 March
Pence per share 2025 2024
Payment date PID Non-PID Total £m £m
For the year ended 31 March 2023:
Third interim 6 April 2023 9.00 - 9.00 67
Final 21 July 2023 12.00 - 12.00 89
For the year ended 31 March 2024:
First interim 6 October 2023 9.00 - 9.00 67
Second interim 2 January 2024 9.20 - 9.20 68
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
Gross dividends 297 291
Dividends in the statement of changes in equity 297 291
Timing difference on payment of withholding tax 8 -
Dividends in the statement of cash flows 305 291
The third quarterly interim dividend of 9.5p per ordinary share, or £71m in
total (2024: 9.3p or £69m in total), was paid on 11 April 2025 as a Property
Income Distribution (PID). The Board has recommended a final dividend for the
year ended 31 March 2025 of 12.3p per ordinary share (2024: 12.1p) to be paid
as a PID. This final dividend will result in a further estimated distribution
of £92m (2024: £90m). Subject to shareholders' approval at the Annual
General Meeting, the final dividend will be paid on 25 July 2025 to
shareholders registered at the close of business on 13 June 2025.
The total dividend paid and recommended in respect of the year ended 31 March
2025 is 40.4p per ordinary share (2024: 39.6p) resulting in a total estimated
distribution of £301m (2024: £294m).
For the year ending 31 March 2026, the Group will pay two half-yearly
dividends, likely to be in in January 2026 and July 2026.
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 27 June 2025.
9. Net cash generated from operations
Reconciliation of operating profit/(loss) to net cash generated from
operations
2025 2024
£m £m
Operating profit/(loss) 526 (227)
Adjustments for:
Net (surplus)/deficit on revaluation of investment properties (91) 628
Loss on disposal of trading properties 6 -
Loss on disposal of investment properties 15 16
Share of profit from joint ventures (37) (2)
Share-based payment charge 6 8
Impairment of goodwill 22 1
(Reversal)/impairment of amounts due from joint ventures (1) 2
Fair value gain on remeasurement of investment - (3)
Non-cash development contract and transaction expenditure 1 26
Rents payable 11 11
Depreciation and amortisation 4 4
Impairment of trading properties 4 11
466 475
Changes in working capital:
Increase in receivables (128) (32)
Increase/(decrease) in payables and provisions 43 (14)
Net cash generated from operations 381 429
Reconciliation to adjusted net cash inflow from operating activities
2025 2024
£m £m
Net cash inflow from operating activities 256 338
Joint ventures net cash inflow from operating activities 4 15
Adjusted net cash inflow from operating activities(1) 260 353
1. Includes cash flows relating to the interest in Liverpool ONE (2024:
MediaCity) which is not owned by the Group but is consolidated in the Group
numbers.
10. Investment properties
2025 2024
£m £m
Net book value at the beginning of the year 9,330 9,658
Acquisitions of investment properties 642 144
Capital expenditure 473 374
Capitalised interest 27 19
Net movement in head leases capitalised(1) 86 (30)
Disposals(2) (479) (207)
Net surplus/(deficit) on revaluation of investment properties 91 (628)
Transfer to property, plant and equipment (26) -
Transfer to assets held for sale (note 17) (110) -
Net book value at the end of the year 10,034 9,330
1. 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.
2. Includes impact of disposals of finance leases.
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.
2025 2024
Group Joint ventures(1) 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 10,125 636 (33) 10,728 9,465 616 (118) 9,963
Less: properties treated as finance leases (12) - - (12) (18) - - (18)
Plus: head leases capitalised 158 1 - 159 77 1 - 78
Less: tenant lease incentives (237) (29) - (266) (194) (32) - (226)
Net book value 10,034 608 (33) 10,609 9,330 585 (118) 9,797
Net surplus/(deficit) on revaluation of investment properties 91 13 3 107 (628) (19) 22 (625)
1. Refer to note 12 for a breakdown of this amount by entity.
The net book value of leasehold properties where head leases have been
capitalised is £1,761m (2024: £1,604m).
Investment properties include capitalised interest of £317m (2024: £290m).
The average rate of interest capitalisation for the year is 4.8% (2024: 4.8%).
The gross historical cost of investment properties is £9,136m (2024:
£8,502m).
11. Trading properties
Development land and infrastructure Residential Total
£m £m £m
At 1 April 2023 98 20 118
Capital expenditure 6 7 13
Capitalised interest - 1 1
Disposals (21) - (21)
Impairment provision (11) - (11)
At 31 March 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
The cumulative impairment provision at 31 March 2025 in respect of Development
land and infrastructure was £31m (2024: £36m); and in respect of Residential
was £nil (2024: £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 2025
Nova, Victoria(3) 50% Central London 31 March Suntec Real Estate Investment Trust
Southside Limited Partnership 50% Major retail 31 March Invesco Real Estate European Fund
Westgate Oxford Alliance Limited Partnership 50% Major retail, Subscale sectors 31 March The Crown Estate Commissioners
Harvest(4) 50% Subscale sectors 31 March J Sainsbury plc
The Ebbsfleet Limited Partnership(6) 50% Subscale sectors 31 March Ebbsfleet Property Limited
West India Quay Unit Trust(6) 50% Subscale sectors 31 March Schroder UK Real Estate Fund
Mayfield(5)(6) 50% Mixed-use urban 31 March LCR Limited, Manchester City Council, Transport for Greater Manchester
Curzon Park Limited(6) 50% Subscale sectors 31 March Derwent Developments (Curzon) Limited
Landmark Court Partnership Limited(6) 51% Central London 31 March TTL Landmark Court Properties Limited
Opportunities for Sittingbourne Limited(6) 50% Mixed-use urban 31 March Swale Borough Council
Cathedral (Movement, Greenwich) LLP(6) 52% Mixed-use urban 31 March Mr Richard Upton
Circus Street Developments Limited(6) 50% Mixed-use urban 31 March High Wire Brighton Limited
Joint operation Ownership interest Business Year end date(2) Joint operation partners
segment
Held at 31 March 2025
Bluewater, Kent 66.25% Major retail 31 March M&G Real Estate,
Royal London Asset Management,
Aberdeen Standard Investments
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 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 Year ended 31 March 2025
Nova, Southside Limited Partnership Westgate Other Total Total
Victoria Oxford
Alliance Partnership
Comprehensive income statement 100% 100% 100% 100% 100% Group share
£m £m £m £m £m £m
Revenue(1) 49 17 35 3 104 52
Gross rental income (after rents payable) 35 13 26 3 77 38
Net rental income 35 11 21 3 70 35
EPRA earnings before interest 33 11 21 3 68 34
Finance expense (15) (6) - - (21) (11)
Net finance expense (15) (6) - - (21) (11)
EPRA earnings 18 5 21 3 47 23
Capital and other items
Net surplus on revaluation of investment properties 22 2 3 - 27 13
Profit on disposal of investment properties - - - 5 5 3
Net development contract expenditure - - - (4) (4) (2)
Profit before tax 40 7 24 4 75 37
Post-tax profit 40 7 24 4 75 37
Total comprehensive income 40 7 24 4 75 37
Group share of profit before tax 20 3 12 2 37
Group share of post-tax profit 20 3 12 2 37
Group share of total comprehensive income 20 3 12 2 37
Joint ventures Year ended 31 March 2024
Nova, Southside Limited Partnership Westgate Other Total Total
Victoria Oxford
Alliance Partnership
Comprehensive income statement 100% 100% 100% 100% 100% Group share
£m £m £m £m £m £m
Revenue(1) 49 11 35 5 100 49
Gross rental income (after rents payable) 34 11 26 5 76 37
Net rental income 34 10 22 1 67 33
EPRA earnings before interest 32 9 21 1 63 32
Finance expense (16) (6) - - (22) (11)
Net finance expense (16) (6) - - (22) (11)
EPRA earnings 16 3 21 1 41 21
Capital and other items
Net deficit on revaluation of investment properties (24) (3) (1) (9) (37) (19)
(Loss)/profit before tax (8) - 20 (8) 4 2
Post-tax (loss)/profit (8) - 20 (8) 4 2
Total comprehensive (loss)/income (8) - 20 (8) 4 2
Group share of (loss)/profit before tax (4) - 10 (4) 2
Group share of post-tax (loss)/profit (4) - 10 (4) 2
Group share of total comprehensive (loss)/income (4) - 10 (4) 2
1. Revenue includes gross rental income (before rents payable), service charge
income, other property related income, trading properties disposal proceeds
and income from long-term development contracts.
Joint ventures 31 March 2025
Nova, Victoria Southside Limited Partnership Westgate Oxford Other Total Total
Alliance Partnership
Balance sheet 100% 100% 100% 100% 100% Group share
£m £m £m £m £m £m
Investment properties(1) 753 138 229 96 1,216 608
Non-current assets 753 138 229 96 1,216 608
Cash and cash equivalents 28 5 11 5 49 24
Other current assets 59 5 14 90 168 84
Current assets 87 10 25 95 217 108
Total assets 840 148 254 191 1,433 716
Trade and other payables and provisions (33) (6) (14) (58) (111) (55)
Current liabilities (33) (6) (14) (58) (111) (55)
Non-current liabilities (78) (148) - - (226) (113)
Non-current liabilities (78) (148) - - (226) (113)
Total liabilities (111) (154) (14) (58) (337) (168)
Net assets/(liabilities) 729 (6) 240 133 1,096 548
Comprised of:
Net assets 729 - 240 133 1,102 551
Accumulated losses recognised as net liabilities(2) - (6) - - (6) (3)
Market value of investment properties(1) 802 139 235 96 1,272 636
Net cash (3) 28 5 11 5 49 24
Joint ventures 31 March 2024
Nova, Victoria Southside Limited Partnership Westgate Oxford Other Total Total
Alliance Partnership
Balance sheet 100% 100% 100% 100% 100% Group share
£m £m £m £m £m £m
Investment properties(1) 727 130 223 91 1,171 585
Non-current assets 727 130 223 91 1,171 585
Cash and cash equivalents 32 4 21 4 61 31
Other current assets 58 7 11 85 161 80
Current assets 90 11 32 89 222 111
Total assets 817 141 255 180 1,393 696
Trade and other payables and provisions (23) (6) (16) (35) (80) (40)
Current liabilities (23) (6) (16) (35) (80) (40)
Non-current liabilities (104) (147) - (19) (270) (135)
Non-current liabilities (104) (147) - (19) (270) (135)
Total liabilities (127) (153) (16) (54) (350) (175)
Net assets/(liabilities) 690 (12) 239 126 1,043 521
Comprised of:
Net assets 690 - 239 130 1,059 529
Accumulated losses recognised as net liabilities(2) - (12) - (4) (16) (8)
Market value of investment properties(1) 780 131 230 91 1,232 616
Net cash (3) 32 4 21 4 61 31
1. The difference between the book value and the market value of investment
properties is the amount recognised in respect of lease incentives, head
leases capitalised and properties treated as finance leases, where applicable.
2. 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.
3. Excludes funding provided by the Group and its joint venture partners.
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 2023 348 (5) 124 61 528
Total comprehensive (loss)/income (4) - 10 (3) 3
Cash and other distributions - - (12) (5) (17)
Other non-cash movements - - (1) 8 7
At 31 March 2024 344 (5) 121 61 521
Total comprehensive (loss)/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
Comprised of:
At 31 March 2024
Non-current assets 344 - 121 64 529
Non-current liabilities(1) - (5) - (3) (8)
At 31 March 2025
Non-current assets 365 - 120 66 551
Non-current liabilities(1) - (3) - - (3)
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
2025 2024
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)) 10,277 636 (33) 10,880 9,465 616 (118) 9,963
Trading properties and long-term contracts 81 - - 81 100 - - 100
Total property portfolio (a) 10,358 636 (33) 10,961 9,565 616 (118) 10,063
Net debt
Borrowings 4,396 - (15) 4,381 3,703 - (73) 3,630
Monies held in restricted accounts and deposits (20) - 1 (19) (6) - - (6)
Cash and cash equivalents (39) (24) - (63) (78) (31) 4 (105)
Fair value of interest-rate swaps (1) - - (1) (23) - 2 (21)
Fair value of foreign exchange swaps and forwards 5 - - 5 (2) - - (2)
Net debt (b) 4,341 (24) (14) 4,303 3,594 (31) (67) 3,496
Add/(less): Fair value of interest-rate swaps 1 - - 1 23 - (2) 21
Adjusted net debt (c) 4,342 (24) (14) 4,304 3,617 (31) (69) 3,517
Adjusted total equity
Total equity (d) 6,532 - (18) 6,514 6,447 - (45) 6,402
Fair value of interest-rate swaps (1) - - (1) (23) - 2 (21)
Adjusted total equity (e) 6,531 - (18) 6,513 6,424 - (43) 6,381
Gearing (b/d) 66.5% 66.1% 55.7% 54.6%
Adjusted gearing (c/e) 66.5% 66.1% 56.3% 55.1%
Group LTV (c/a) 41.9% 39.3% 37.8% 35.0%
EPRA LTV(2) 41.0% 36.3%
Security Group LTV 41.9% 37.0%
Weighted average cost of debt 3.4% 3.4% 3.3% 3.3%
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 used by external investors and lenders.
14. Borrowings
2025 2024
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)) 270 270 270 15 15 15
Euro Unsecured Floating Various((1)) 310 310 310 518 518 518
US Dollar Unsecured Floating Various((1)) 170 170 170 148 148 148
Syndicated and bilateral bank debt Secured Floating SONIA + margin - - - 292 292 292
Total current borrowings 750 750 750 973 973 973
Amounts payable under head leases 2 2 2 2 2 2
Total current borrowings including amounts payable under head leases
752 752 752 975 975 975
Non-current borrowings
Medium term notes (MTN)
A5 5.391% MTN due 2027 Secured Fixed 5.4 - - - 87 86 87
A16 2.375% MTN due 2029 Secured Fixed 2.5 350 333 349 350 325 349
A6 5.376% MTN due 2029 Secured Fixed 5.4 65 65 65 65 66 65
A13 2.399% MTN due 2031 Secured Fixed 2.4 300 274 300 300 270 299
A7 5.396% MTN due 2032 Secured Fixed 5.4 77 78 77 77 78 77
A18 4.750% MTN due 2033 Secured Fixed 4.9 300 294 295 300 299 297
A17 4.875% MTN due 2034 Secured Fixed 5.0 400 393 396 400 403 393
A11 5.125% MTN due 2036 Secured Fixed 5.1 50 47 50 50 48 50
A19 4.625% MTN due 2036 Secured Fixed 4.9 350 330 346 - - -
A14 2.625% MTN due 2039 Secured Fixed 2.6 500 371 495 500 387 495
A15 2.750% MTN due 2059 Secured Fixed 2.7 500 275 495 500 309 495
2,892 2,460 2,868 2,629 2,271 2,607
Syndicated and bilateral bank debt Secured Floating SONIA + margin 778 778 778 123 123 123
Total non-current borrowings 3,670 3,238 3,646 2,752 2,394 2,730
Amounts payable under head leases Unsecured Fixed 4.0 156 230 156 75 98 75
Total non-current borrowings including amounts payable under head leases
3,826 3,468 3,802 2,827 2,492 2,805
Total borrowing including amounts payable under head leases
4,578 4,220 4,554 3,802 3,467 3,780
Total borrowings excluding amounts payable under head leases
4,420 3,988 4,396 3,725 3,367 3,703
1. Non-Sterling commercial paper is immediately swapped into Sterling. The
interest rate is fixed at the time of the issuance for the duration (1 to 3
months) and tracks SONIA swap rates.
Reconciliation of the movement in borrowings 2025 2024
£m £m
At the beginning of the year 3,780 3,538
Net proceeds from ECP issuance 69 378
Net proceeds from bank debt 538 33
Repayment of bank debt (475) -
Net facilities acquired 300 -
Repayment of MTNs (87) (427)
Issue of MTNs (net of finance fees) 346 297
Foreign exchange movement on non-Sterling borrowings 2 (9)
Movement in amounts payable under head leases 81 (30)
At 31 March 4,554 3,780
Reconciliation of movements in liabilities arising from financing activities 2025
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 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
2024
Borrowings 3,538 281 (9) - (30) 3,780
Derivative financial instruments (38) (18) 10 21 - (25)
3,500 263 1 21 (30) 3,755
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 £10bn at 31 March 2025 (2024: £9.2bn). 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.
At 31 March 2025, the Group's committed facilities totalled £2,590m (2024:
£2,907m).
Syndicated and bilateral bank debt Authorised Drawn Undrawn
Maturity as at 2025 2024 2025 2024 2025 2024
31 March 2025
£m £m £m £m £m £m
Syndicated debt 2026-29 2,490 2,682 778 415 1,712 2,267
Bilateral debt 2026 100 225 - - 100 225
2,590 2,907 778 415 1,812 2,492
The majority of the Group's syndicated and bilateral facilities are secured on
the assets of the Security Group, with the exception of facilities secured on
the assets at Liverpool ONE of which £240m was drawn at 31 March 2025, and
MediaCity of which £nil was drawn at 31 March 2025 (2024: £292m).
During the year ended 31 March 2025, the amounts drawn under the Group's
facilities increased by £363m. The MediaCity bank facility was successfully
refinanced on 13 June 2024 to £195m and subsequently fully repaid and closed
on 6 November 2024 (2024: £292m drawn). Also during the year, the Liverpool
ONE shopping centre was acquired with a fully drawn £300m secured bank
facility. On 27 January 2025, £60m of this facility was repaid.
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. Commercial paper in
issuance at 31 March 2025 was £750m (2024: £681m). The total amount of cash
and available undrawn facilities, net of commercial paper, at 31 March 2025
was £1,101m (2024: £1,889m).
15. Monies held in restricted accounts and deposits
2025 2024
£m £m
Short-term deposits 15 6
Cash at bank and in hand 5 -
20 6
The credit quality of monies held in restricted accounts and deposits can be
assessed by reference to external credit ratings of the counterparty where the
account or deposit is placed.
2025 2024
£m £m
Counterparties with external credit ratings
AAA 8 -
A+ 12 6
20 6
16. Cash and cash equivalents
2025 2024
£m £m
Cash at bank and in hand 30 78
Short-term deposits 9 -
39 78
The credit quality of cash and cash equivalents can be assessed by reference
to external credit ratings of the counterparty where the account or deposit is
placed.
2025 2024
£m £m
Counterparties with external credit ratings
AAA 4 -
A+ 30 78
A 3 -
A- 1 -
BBB+ 1 -
39 78
2025 2024
Gross amounts of financial assets Gross amounts of financial liabilities Net amounts recognised in the balance sheet Gross amounts of financial assets Gross amounts of financial liabilities Net amounts recognised in the balance sheet
£m £m £m £m £m £m
Assets
Cash and cash equivalents 140 (101) 39 230 (152) 78
140 (101) 39 230 (152) 78
17. Assets held for sale
On 28 March 2025, the Group exchanged contracts for the sale of Land
Securities Lakeside Limited, which owns the Lakeside Retail Park in West
Thurrock for a headline property price of £114m. Since the risks and returns
of ownership had not fully transferred to the buyer at 31 March 2025, the
property was classified as a Non-current asset held for sale with a carrying
value of £110m. On 29 April 2025, the Group completed on the sale.
18. Events after the reporting period
On 29 April 2025, the Group completed on the sale of Land Securities Lakeside
Limited.
On 2 May 2025, the Group put in place a new £300m bank facility with a
November 2027 maturity.
On 14 May 2025, the Group increased its interest in Liverpool ONE to 96.5%
following the full repayment of the £240m asset level bank facility.
Subsequent to the year end, the Group also exchanged or completed on disposals
of properties totalling £45m in value.
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 return on equity 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 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
31 March 2024
EPRA NRV EPRA NTA EPRA NDV
£m £m £m
Net assets attributable to shareholders 6,402 6,402 6,402
Shortfall of fair value over net investment in finance lease book value (5) (5) (5)
Other intangible asset - (2) -
Fair value of interest-rate swaps (22) (22) -
Shortfall of fair value of debt over book value (note 14) - - 313
Excess of fair value of trading properties over book value 25 25 25
Purchasers' costs(1) 605 - -
Net assets used in per share calculation 7,005 6,398 6,735
EPRA NRV EPRA NTA EPRA NDV
Diluted net assets per share 940p 859p 904p
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 2025
Measure Definition for EPRA measure Notes EPRA
measure
EPRA earnings Recurring earnings from core operational activity 4 £374m
EPRA earnings per share EPRA earnings per weighted number of ordinary shares 4 50.3p
EPRA diluted earnings per share EPRA diluted earnings per weighted number of ordinary shares 4 50.1p
EPRA Net Tangible Assets (NTA) Net assets adjusted to exclude the fair value of interest-rate swaps, 4 £6,530m
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 874p
EPRA net disposal value (NDV) Net assets adjusted to exclude the fair value of debt and goodwill on deferred 4 £6,867m
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 919p
EPRA loan-to-value (LTV) (1) Ratio of adjusted net debt, including net payables, to the sum of the net 13 41.0%
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 2.8%
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 6.0%
Cost ratio(4) Total costs as a percentage of gross rental income (including direct vacancy 20 21.7%
costs)(4)
Total costs as a percentage of gross rental income (excluding direct vacancy 20 18.8%
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 2025
£m
ERV of vacant properties 20
ERV of Combined Portfolio excluding properties under development 711
EPRA vacancy rate (%) 2.8
Table 18: Change in net rental income from the like-for-like portfolio(1)
2025 2024 Change
£m £m £m %
Central London 244 229 15 6.6%
Major retail 144 137 7 5.1%
Subscale sectors 60 60 - 0.0%
Mixed-use 37 36 1 2.8%
485 462 23 5.0%
1. Excludes movement in bad/doubtful debts and surrender premiums received
during the period.
Table 19: EPRA Net initial yield (NIY) and Topped-up NIY
31 March 2025
£m
Combined Portfolio((1)) 10,880
Trading properties 108
Less: Properties under development, trading properties under development and (1,283)
land
Like-for-like investment property portfolio, proposed and completed 9,705
developments, and completed trading properties
Plus: Allowance for estimated purchasers' costs 575
Grossed-up completed property portfolio valuation (a) 10,280
EPRA annualised cash passing rental income(2) 634
Net service charge expense(3) (11)
Void costs and other deductions (71)
EPRA Annualised net rent(2) (b) 552
Plus: Rent-free periods and other lease incentives (annualised) 60
Topped-up annualised net rents (c) 612
EPRA NIY (b/a) 5.4%
EPRA Topped-up NIY (c/a) 6.0%
1. Includes owner-occupied property and non-current assets held-for-sale.
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
2025 2024
Total Cost ratio %(1) Total Cost ratio %(1)
£m £m
Gross rental income (before rents payable) 636 653
Costs recovered through rents but not separately invoiced (12) (9)
Adjusted gross rental income 624 644
£m Rents payable (12) (12)
Gross rental income (before rents payable) 636 EPRA gross rental income 612 632
Rents payable (12)
Gross rental income (after rents payable) 624 Direct Managed operations 20 10
Net service charge expense (11) property Tenant default (11) (6)
Net direct property expenditure (73) costs Void related costs 18 30
Net other operating income 1 £72m Other direct property costs 42 54
Movement in bad and doubtful debts provision 11
Segment net rental income 552
Net indirect expenses (73)
Segment profit before finance expense 479 Net indirect Development expenditure 6 9
Net finance expense - Group (94) expenses Asset management, 70 70
administration and
compliance
Net finance expense - joint ventures (11) £73m
EPRA earnings 374
Total (incl. direct vacancy costs) 145 167
Costs recovered through rents (12) (9)
EPRA costs (incl. direct vacancy costs) 133 21.7 158 25.0
Less: Direct vacancy costs (18) (30)
EPRA (excl. direct vacancy costs) 115 18.8 128 20.3
1. Percentages represent costs divided by EPRA gross rental income.
Table 21: Acquisitions, disposals and capital expenditure
Year ended Year ended
31 March 2025
31 March 2024
Investment properties Group (excl. joint ventures) 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 9,330 585 (118) 9,797 10,120
Acquisitions 642 - 82 724 144
Capital expenditure 473 13 - 486 376
Capitalised interest 27 - - 27 19
Net movement in head leases capitalised 86 - - 86 (30)
Disposals (479) (3) - (482) (207)
Net surplus/(deficit) on revaluation of investment properties 91 13 3 107 (625)
Transfer to non-current assets held for sale (110) - - (110) -
Transfer to property, plant and equipment (26) - - (26) -
Net book value at the end of the year 10,034 608 (33) 10,609 9,797
(Loss)/profit on disposal of investment properties (15) 3 - (12) (16)
Trading properties £m £m £m £m £m
Net book value at the beginning of the year 100 - - 100 118
Transfer to trade and other receivables (11) - - (11) -
Acquisitions 10 - - 10 -
Capital expenditure 11 - - 11 13
Capitalised interest 1 - - 1 1
Disposals (26) - - (26) (21)
Movement in impairment (4) - - (4) (11)
Net book value at the end of the year 81 - - 81 100
Loss on disposal of trading properties (6) - - (6) -
Acquisitions, development and other capital expenditure Investment Trading Combined Combined
properties(2) properties Portfolio Portfolio
£m £m £m £m
Acquisitions(3) 724 10 734 144
Development capital expenditure(4) 312 6 318 226
Other capital expenditure 174 5 179 163
Capitalised interest 27 1 28 20
Acquisitions, development and other capital expenditure 1,237 22 1,259 553
Disposals £m £m
Net book value - investment property disposals 482 207
Net book value - trading property disposals 26 21
Net book value - other net assets (1) 3
Loss on disposal - investment properties (15) (16)
Profit on disposal - trading properties (6) -
Other 61 1
Total disposal proceeds 547 216
1. This represents the interest in Liverpool One which we do not own but
consolidate in the Group numbers. The movement in acquisitions includes the
acquisition of the remaining non-controlling interest in Media City which was
purchased during the financial year.
2. See EPRA analysis of capital expenditure table 22 for further details.
3. Properties acquired during the year.
4. 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 2025
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
Central London
West End offices - 8 - 19 3 22 - 30 1 - 29
City offices - - - 70 - 70 2 72 - - 72
Retail and other - - - 16 - 16 - 16 1 - 15
Developments - 272 - - - - 25 297 - - 297
Total Central London - 280 - 105 3 108 27 415 2 - 413
Major retail
Shopping centres 630 - 5 21 6 32 - 662 5 (33) 690
Outlets - - - 15 2 17 - 17 - - 17
Total Major retail 630 - 5 36 8 49 - 679 5 (33) 707
Mixed-use urban
London 2 17 - - - - - 19 - - 19
Other cities 92 15 - 8 - 8 - 115 6 115 (6)
Total Mixed-use urban 94 32 - 8 - 8 - 134 6 115 13
Subscale sectors
Leisure - - - 1 6 7 - 7 - - 7
Hotels - - - - - - - - - - -
Retail parks - - 2 - - 2 - 2 - - 2
Total Subscale sectors - - 2 1 6 9 - 9 - - 9
Total capital expenditure 724 312 7 150 17 174 27 1,237 13 82 1,142
Timing difference between accrual and cash basis (488) (2) (82) (404)
Total capital expenditure on a cash basis 749 11 - 738
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 2025
% of Group rent(1)
Central Government 5.2%
Deloitte 2.1%
BBC 1.5%
ITX 1.5%
Taylor Wessing 1.5%
Cineworld 1.4%
Boots 1.3%
Qube RT 1.1%
M&S 1.0%
H&M 0.9%
Q Park Limited 0.9%
Sainsburys 0.9%
19.3%
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 2025 31 March 2024 Surplus/ Surplus/ (deficit) 31 March 2025 31 March 2024 31 March 2025 31 March 2024 31 March 2025 31 March 2024
(deficit)
£m £m £m % £m £m £m £m £m £m
Central London
West End offices 3,124 3,109 17 0.6 162 148 164 160 202 186
City offices 1,445 1,192 20 1.4 80 68 85 70 111 93
Retail and other((11)) 1,022 991 (2) (0.2) 58 58 58 58 54 55
Developments(6) 1,108 926 27 2.5 2 20 - 8 85 93
Total Central London 6,699 6,218 62 1.0 302 294 307 296 452 427
Major retail
Shopping centres 1,977 1,226 81 4.3 156 131 186 121 188 122
Outlets 626 605 4 0.5 51 57 48 48 52 49
Total Major retail 2,603 1,831 85 3.4 207 188 234 169 240 171
Mixed-use urban
London 190 191 (18) (8.1) 11 17 10 11 14 16
Major regional cities(9) 599 510 (24) (4.0) 43 41 37 37 49 38
Total Mixed-use urban(8) 789 701 (42) (5.0) 54 58 47 48 63 54
Subscale sectors
Leisure 423 423 (5) (1.2) 44 48 44 46 41 42
Hotels - 400 - - 2 35 - 35 - 29
Retail parks(10) 366 390 19 5.4 27 30 25 27 27 29
Total Subscale sectors 789 1,213 14 1.8 73 113 69 108 68 100
Combined Portfolio 10,880 9,963 119 1.1 636 653 657 621 823 752
Properties treated as finance leases - - - - (1) (1)
Combined Portfolio 10,880 9,963 119 1.1 635 652
Represented by:
Investment portfolio 10,244 9,347 106 1.1 585 613 575 584 735 712
Share of joint ventures 636 616 13 2.2 50 39 82 37 88 40
Combined Portfolio 10,880 9,963 119 1.1 635 652 657 621 823 752
Total portfolio
analysis
Notes:
Net initial yield(4) Equivalent yield(5) 1. Refer to Glossary for definition.
31 March 2025 Movement in like-for-like(7) 31 March 2025 Movement in like-for-like(7)
% bps % bps 2. Annualised rental income is annual 'rental income' (as defined in the
Central London Glossary) at the balance sheet date, except that car park and
West End offices 4.6 36 5.4 14 commercialisation income are included on a net basis (after deduction for
City offices 4.2 89 6.2 13 operational outgoings). Annualised rental income includes temporary lettings.
Retail and other 4.3 (11) 4.9 (2)
Developments(6) 0.0 n/a 5.3 n/a 3. Net estimated rental value is gross estimated rental value, as defined
Total Central London 4.4 40 5.5 12 in the Glossary, after deducting expected rent payable.
Major retail
Shopping centres 7.2 (51) 7.7 (31) 4. Net initial yield - refer to Glossary for definition. This calculation
Outlets 6.3 - 6.9 (7) includes all properties including those sites with no income.
Total Major retail 7.0 (33) 7.5 (22)
Mixed-use urban 5. Equivalent yield - refer to Glossary for definition. Future
London 4.3 18 6.6 8 developments are excluded from the calculation of equivalent yield on the
Major regional cities(9) 6.6 7 8.2 47 Combined Portfolio.
Total Mixed-use urban(8) 5.8 8 7.7 36
Subscale sectors 6. Comprises the development pipeline - refer to Glossary for definition.
Leisure 7.8 (94) 8.8 (8)
Retail parks 6.1 9 6.7 (24) 7. The like-for-like portfolio - refer to Glossary for definition.
Total Subscale sectors 7.0 (51) 7.7 (22)
Combined Portfolio 5.4 14 6.3 3 8. The prior year data has been represented to align with the updated
categories disclosed.
Represented by:
Investment portfolio 5.4 n/a 6.3 n/a 9. Includes owner-occupied property.
Share of joint ventures 5.8 n/a 6.2 n/a
Combined Portfolio 5.4 n/a 6.3 n/a 10. Includes non-current assets held-for-sale.
11. Short-term commercialisation income from Piccadilly Lights has been
included in the current year disclosure and to ensure year-on-year alignment
the comparatives have been updated by £15m.
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. Net initial yield - refer to Glossary for definition. This calculation
includes all properties including those sites with no income.
5. Equivalent yield - refer to Glossary for definition. Future
developments are excluded from the calculation of equivalent yield on the
Combined Portfolio.
6. Comprises the development pipeline - refer to Glossary for definition.
7. The like-for-like portfolio - refer to Glossary for definition.
8. The prior year data has been represented to align with the updated
categories disclosed.
9. Includes owner-occupied property.
10. Includes non-current assets held-for-sale.
11. Short-term commercialisation income from Piccadilly Lights has been
included in the current year disclosure and to ensure year-on-year alignment
the comparatives have been updated by £15m.
Table 25: Floor Areas((1))
31 March 2025
Million sq ft
Central London
West End offices 2.7
City offices 1.7
Retail and other 0.9
Total Central London 5.3
Major retail
Shopping centres 9.4
Outlets 1.0
Total Major retail 10.4
Mixed-use urban
London 0.8
Major regional cities 2.1
Total Mixed-use urban 2.9
Subscale sectors
Leisure 3.3
Retail parks 1.6
Total Subscale sectors 4.9
Total 23.5
1. Joint ventures are reflected at 100% values, not Group share.
Table 26: Reconciliation of segmental information note to statutory reporting
for the year ended 31 March 2024
Year ended 31 March 2024
Group income statement Joint Adjustment for non-wholly owned subsidiaries(2) Total EPRA Capital and other items
£m ventures(1) £m £m earnings £m
£m £m
Rental income 622 38 (8) 652 652 -
Finance lease interest 1 - - 1 1 -
Gross rental income (before rents payable) 623 38 (8) 653 653 -
Rents payable (11) (1) - (12) (12) -
Gross rental income (after rents payable) 612 37 (8) 641 641 -
Service charge income 117 8 (2) 123 123 -
Service charge expense (133) (9) 3 (139) (139) -
Net service charge expense (16) (1) 1 (16) (16) -
Other property related income 35 3 - 38 38 -
Direct property expenditure (114) (6) 1 (119) (119) -
Movement in bad and doubtful debt provision 6 - - 6 6 -
Segment net rental income 523 33 (6) 550 550 -
Other income 1 - - 1 1 -
Administrative expenses (73) (1) - (74) (74) -
Depreciation, including amortisation of software (4) - - (4) (4) -
EPRA earnings before interest 447 32 (6) 473 473 -
Share of post-tax loss from joint ventures 2 (2) - - - -
Loss on disposal of investment properties(1) (16) - - (16) - (16)
Net deficit on revaluation of investment properties (628) (19) 22 (625) - (625)
Net development contract and transaction expenditure (18) - - (18) - (18)
Fair value gain on remeasurement of investment 3 - - 3 - 3
Impairment of amounts due from joint ventures (2) - - (2) - (2)
Impairment of goodwill (1) - - (1) - (1)
Impairment of trading properties (11) - - (11) - (11)
Depreciation (2) - - (2) - (2)
Other costs (1) - - (1) - (1)
Operating (loss)/profit (227) 11 16 (200) 473 (673)
Finance income 12 - - 12 11 1
Finance expense (126) (11) 6 (131) (113) (18)
(Loss)/profit before tax (341) - 22 (319) 371 (690)
Taxation - - - -
(Loss)/profit for the year (341) - 22 (319)
1. Reallocation of the share of post-tax profit from joint ventures reported
in the Group income statement to the individual line items reported in the
segmental results table.
2. Removal of the non-wholly owned share of results of the Group's
subsidiaries. The non-wholly owned subsidiaries are consolidated at 100% in
the Group's income statement, but only the Group's share is included in EPRA
earnings reported in the segmental results table. The non-owned element of the
Group's subsidiaries are included in the 'Capital and other items' column
presented in the Group's income statement, together with items not directly
related to the underlying rental business such as investment properties
valuation changes, profits or losses on the disposal of investment properties,
the proceeds from, and costs of, the sale of trading properties, income from
and costs associated with development contracts, amortisation and impairment
of intangibles, and other attributable costs, arising on business
combinations.
3. Included in the loss on disposal of investment properties is a £2m charge
related to the provision for fire safety remediation works on properties no
longer owned by the Group but for which the Group is responsible for
remediating under the Building Safety Act 2022.
Table 27: Property Income Distribution (PID) calculation
Year ended Year ended
31 March 2025
31 March 2024
£m £m
Profit/(loss) before tax per income statement 393 (341)
Accounting profit/(loss) on residual operations 45 (23)
Profit/(loss) attributable to tax-exempt operations 438 (364)
Adjustments
Capital allowances (56) (55)
Capitalised interest (29) (20)
Revaluation deficit/(surplus) (117) 649
Tax exempt disposals (18) 12
Capital expenditure 5 6
Other tax adjustments 6 (9)
REIT dividends received (11) (10)
Estimated tax-exempt income for the year 218 209
PID thereon (90%) 197 188
REIT dividends received (100%) 11 10
Minimum PID to be paid 208 198
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 £3m current tax credit (2024: £nil).
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 2024.
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 2025 and 31 March 2024:
PID allocation Dividends in excess of minimum PID Total
dividend
Year ended Year ended Pre-31
31 March 2025
31 March 2024
March 2024
£m £m
£m £m £m
Dividends paid in year to 31 March 2024 - 198 63 30 291
Dividends paid in year to 31 March 2025 208 - - 89 297
Minimum PID to be paid by 31 March 2026 - - n/a n/a -
Total PID required 208 198
The Group has met all the REIT requirements, including the payment by 31 March
2025 of the minimum Property Income Distribution (PID) for the year ended 31
March 2024. The forecast minimum PID for the year ended 31 March 2025 is
£208m, which must be paid by 31 March 2026. The Group has already made PID
dividends relating to 31 March 2025 of £208m.
Our latest tax strategy can be found on our corporate website. In the year,
the total taxes we incurred and collected were £135m (2024: £136m), of which
£36m (2024: £37m) 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 Group PLC
Aspect House
Spencer Road
Lancing
West Sussex
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 2025 of
12.3p 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 25 July 2025 to shareholders registered at the close
of business on 13 June 2025. The last date for Dividend Reinvestment Plan
(DRIP) elections will be 27 June 2025. The total dividend paid and payable in
respect of the year ended 31 March 2025 is 40.4p (2024: 39.6p).
For the year ending 31 March 2026, the Group will pay two half-yearly
dividends, likely to be in January 2026 and July 2026.
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: landsec.com
(http://www.landsec.com) /investors 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
2025
Financial year end 31 March
Preliminary results announcement 16 May
Annual General Meeting 10 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 13.
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 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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