UK retail crisis puts a dent on Landsec property values
The dramatic wave of administrations and CVAs has dragged back profitability for property development firm Landsec, which owns shopping centres including Bluewater, Trinity Leeds and Westgate Oxford.
In its latest financial results published on Tuesday the company revealed a 186% increase in pre-tax losses to £123 million, as the value of its property plunged by £577 million hit by a fall in retailer demand for shopping centre and retail park units.
It was a “challenging year” for the company, which is now trying to focus on its outlet, leisure and hotel assets which have been more resilient in the face of political uncertainty and retailer difficulties.
“Retailers have faced margin pressure from a variety of rising costs, weakening demand and a continuing shift to online. This has led to administrations and company voluntary arrangements (CVAs), the impact of which can be seen in our results. The difficult retail environment has led to a fall in the values of our shopping centres, retail parks and, to a lesser extent, our central London shops,” Landsec said in a statement.
However, the firm said revenue profit increased 8.9% to £442 million thanks to higher net rental income and a reduction in costs.
Moving forward into the new year, Landsec said it will focus on its developments in London and on experience-led destinations, but it sees “no near-term improvement in retail market conditions, with CVA activity set to continue”.
“Rental values are likely to decline further in shopping centres and retail parks, though we expect continued rental growth in outlets and select leisure destinations. Consumers will continue to be attracted to destinations that provide a broad range of brands and experiences,” chief executive Robert Noel said.
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