Land Securities, the largest UK REIT by capitalisation, said in its Q3 management statement today that lettings activity has held up well, with the office element of One New Change EC4 now 82% let, and 20% of 123 Victoria Street SW1 let 3 months ahead of completion on site, while the retail elements of the Buchanan Street commercial development in Glasgow is 90.7% pre-let, Trinity Leeds is up to 65% let, and St Davids 2 in Cardiff is 95% taken.
Since the end of the quarter Mace has taken a 67,000 sq ft slice of London business property at Moorgate Hall (EC2) on a 15 year term.
Void levels in the retail portfolio are creeping up due to the failure of the Brand Empire concept and the administrations of Barratts, Officiers Club, La Senza, and The Outdoor Group. The recent Peacocks administration will impact further on that.
Land Securities' CEO Francis Salway, who is to hand the baton over to Robert Noel at the end of this FY, said:
"Despite weak economic news flow, we have continued to make progress in the period having completed a number of development lettings, and further reduced void levels on our portfolio. As is to be expected in a period of economic uncertainty, letting transactions are taking longer to execute."
"Having refinanced over £1 billion of our bank facilities, we are well placed with long average duration of debt, moderate balance sheet gearing and the capacity to invest. We expect the economic uncertainty to continue in the near term, but we remain confident of our ability to withstand economic fluctuations and to take advantage of opportunities that may arise from the scarcity of bank funding."
Financially Land Secs looks safe at present with a group LTV on its debt of 37.2% and average debt maturity of 11.2 years. However, all that could change if the joint venture 38 storey Walkie Talkie City development does not find some tenants, while the development market recoils from the shock of two major schemes stalling last week.
Shares in Land Securities closed last night at 691.5p valuing the firm at £5.388 billion.