Landsec Raises EPS Outlook on Strong Half-Year Results

Landsec’s half-year: income strength, higher guidance and a sharper EPS focus

Landsec’s interim numbers show a business leaning into income growth and capital discipline. EPRA EPS rose 3.2% to 25.8p on the back of 5.2% like-for-like rental income growth and a 6% cut in overheads. The board lifted near-term guidance and nudged up medium-term EPS potential, even while absorbing losses on asset disposals designed to recycle capital out of low-returning properties.

Quick definitions for newer readers:

• EPRA EPS is a sector-standard earnings measure that strips out valuation swings.
• NTA is net tangible assets per share, a proxy for net asset value.
• LTV is loan-to-value, debt as a percentage of property value.
• ERV is estimated rental value, the valuer’s view of market rent.

Half-year headline numbers investors should know

Metric	H1 FY26	Change vs prior
EPRA earnings	£192m	up from £186m
EPRA EPS	25.8p	+3.2%
IFRS profit before tax	£98m	down from £243m
Dividend per share	19.0p	+2.2%
EPRA NTA per share	863p	-1.3%
Like-for-like net rental income	+5.2%	strong growth
EPRA occupancy	97.7%	+40bps
Group LTV	40.3%	38.9% pro-forma
Net debt	£4,400m	slightly higher
Net debt/EBITDA	8.6x	target below 7x in 2 years

Note the IFRS profit drop reflects a £67m loss on selling £644m of low or no return assets. That hit book value but is broadly EPS neutral, apart from the timing impact from the Queen Anne’s Mansions disposal.

Guidance raised and a clearer EPS roadmap

• FY26 like-for-like net rental income now expected to grow around 4-5% (was 3-4%).
• FY26 EPRA EPS growth now guided to the top end of 2-4% before the QAM effect.
• QAM sale turns future finance lease income into a cash receipt, reducing reported earnings by £7m in FY26 and £15m in FY27.
• Overheads now targeted to the low £60m’s by FY27 (previously below £65m).
• Potential FY30 EPRA EPS lifted to about 62p from about 60p, implying 4-4.5% CAGR from FY25.
• Leverage target tightened: net debt/EBITDA below 7x within two years, LTV expected to fall below 35% over time.

For me, the key takeaway is the pivot to sustainable EPS growth rather than pure NAV accretion. That aligns incentives to drive income, cut costs and recycle capital faster.

Operations: two engines firing

Offices: quality wins the day

• Like-for-like net rental income up 6.8% with EPRA occupancy at a very high 98.8%.
• ERVs up 3.1%; reversionary potential stands at 12%.
• £19m of lettings signed or in solicitors’ hands at 9% above ERV; relettings/renewals 6% above previous rent.
• Office portfolio valuation down 1.0% due to specific factors, including QAM income unwinding and business rates at Piccadilly Lights.

Landsec expects to complete £866m of London developments in the next 6-9 months at a 7.0% gross yield on cost. Around 840,000 sq ft is coming through with a net effective rental value of roughly £58m against £43m of associated interest costs. Management assumes c. 40% let at completion and full lease-up within about 12 months. Sensitivity: every 10 percentage point swing in leasing changes FY27 EPS by around 0.9p. So lease-up pace matters.

Retail: best-in-class destinations keep winning

• Like-for-like net rental income up 5.0%, EPRA occupancy at 96.7% (+50bps year-on-year).
• Retail sales across the portfolio up a punchy 7.7% with footfall up 4.5%.
• £33m of lettings signed or in solicitors’ hands at 10% above ERV; relettings/renewals 13% above previous rent.
• ERVs up 2.2%; retail portfolio valuation up 2.3%.

With no new supply of these top-tier destinations and assets nearly full, Landsec targets 4.5-7% CAGR in retail income over the next five years via reversion, turnover rent, commercialisation and small, high-return capex.

Capital recycling and balance sheet

• £644m of disposals since March, including four retail parks (£261m) and a small City office (£50m).
• Strategy is to redeploy into major retail where income returns and growth are more attractive than new development today.
• Committed development expected to drop to about £0.2bn by mid-2026. No meaningful new development commitments in the next 12-18 months.
• Average debt maturity 8.9 years with no refinancing needed until 2027; 85% of debt fixed or hedged; average cost 3.6%.

The LTV at 40.3% is within the 25-40% target range but near the top. Pro-forma for post period-end sales it would have been 38.9%. Management aims to keep pushing this down as income rises and development exposure shrinks.

Residential option building quietly in the background

Planning momentum is positive: detailed consent for the first 879 homes at Mayfield, Manchester and consents for 2,800 homes at Lewisham. Combined with Finchley Road and MediaCity, the pipeline stands at about 9,000 homes. Policy shifts in London, including lower affordable housing requirements and Community Infrastructure Levy, could lift residential returns by around 50-75bps, but capex will be kept very limited for now. The bigger financial contribution is expected beyond FY30.

Dividend and investor logistics

The interim dividend is 19.0p per share, up 2.2%, payable on 9 January 2026 to holders on 27 November 2025, split between a 13.6p PID and a 5.4p ordinary dividend. A DRIP is available.

My take: why this matters for shareholders

What looks positive

• Income momentum is real: 5.2% like-for-like rental growth and 97.7% occupancy across the portfolio.
• Guidance raised and medium-term EPS potential lifted to c. 62p by FY30, with clearer levers to get there.
• Retail strength stands out, both operationally and in valuation gains.
• Cost control is delivering, with overheads targeted to the low £60m’s by FY27.
• Debt profile remains resilient with long maturities and largely fixed or hedged interest.

What to watch

• IFRS profit dipped and NTA per share fell 1.3% due to disposal losses. That is deliberate, but it still dents book value.
• Leverage is elevated vs the bottom of the cycle. Progress towards LTV below 35% and net debt/EBITDA below 7x will be key.
• FY27 EPS depends on leasing the two big London office schemes. Slower take-up would shave pence off earnings.
• QAM disposal timing reduces reported earnings by £7m in FY26 and £15m in FY27.
• Office valuations were down 1.0% and could remain sensitive to yields and business rates.

Bottom line

This is a confident update from Landsec. The company is prioritising sustainable EPS growth, doubling down on winning retail destinations, and dialling back higher-risk development exposure. If leasing lands as expected and capital recycling continues, the pathway to higher EPS, lower leverage and rising dividends looks credible.

For retail investors, the story is less about flashy valuation uplifts and more about grinding out income growth with tight cost control. On that score, H1 shows the plan is working.