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.