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Land Securities said many businesses delayed leasing decisions ahead of the UK budget, worried about possible property tax changes. This caution, along with softer property valuations in the first half of its financial year, contributed to a 4% drop in Landsec's share price. CEO Mark Allan noted slower enquiries and fewer completed leases as firms waited for greater clarity. Analysts suggested the weakness may be temporary. Despite the slowdown, Landsec raised its net rental income growth forecast for fiscal 2026 to 4%-5% and expects earnings per share to reach the upper end of its range. The company continues shifting away from non-core London offices toward retail and residential assets.
Land Securities recently stated that businesses had been postponing leasing decisions in anticipation of the UK budget, concerned that there could be adjustments to property taxes. The company noted that property valuations had weakened during the first half of its financial year, a development that contributed to a fall of about 4% in its share price at the end of the week. Advertisement
Chief executive Mark Allan mentioned during a media call that the firm had observed slower levels of leasing enquiries and fewer conversions in the period leading up to the fiscal announcement. He explained that many businesses preferred to wait in order to better assess the operating environment.
Businesses and consumers have generally remained cautious over major investments amid speculation that the Finance Minister's budget later in the month could introduce tax increases. Analysts at JPM commented that Landsec's current valuation did not appear stretched and noted that subdued UK wage data and expectations that the budget could provide some clarity might mean the current weakness in the company's share price proves temporary.
Landsec, which operates prime office spaces in Central London and manages major retail centres across the country, increased its like-for-like net rental income growth projection for fiscal 2026 to 4%-5%, compared with its earlier estimate of 3%-4%. This revised outlook reflected steady performance across its premium office portfolio and its larger retail properties. The firm also expected EPRA earnings-per-share growth to reach the upper end of its target range, excluding the effects of its planned disposal of Queen Anne's Mansions to the Arora Group.
Although Landsec's shares slipped during the week, they remained more than 6% higher for the year so far. The business has been divesting non-core London offices and redirecting capital towards retail and residential projects in response to ongoing pressure on office valuations.
The company planned to reduce its development pipeline to around 200 million pounds (about USD 268.42 million) by the middle of 2026 and intended to pause new development commitments on office schemes for the next 12-18 months as it focused increasingly on income-driven retail assets. For the six months to the end of September, its EPRA net tangible assets per share fell by 1.25% to 863 pence, a decline attributed to the disposal of lower-return properties.
Source - Reuters
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