Land Securities Group Plc, the U.K.’s largest real estate investment trust, said full-year profit increased as the company secured tenants for empty properties. The shares rose the most in 16 months.
Net income rose to 533 million pounds ($810 million), or 68.1 pence a share, from 522.9 million pounds, or 67.4 pence, a year earlier, the London-based company said in a statement today. Adjusted net asset value climbed to 903 pence a share from 863 pence last year.
Land Securities has 8.7 million square feet (810,000 square meters) of offices and shops in London, where the value of income-producing properties rose 7.4 percent in the first quarter, according to Investment Property Databank Ltd. The company and Canary Wharf Group Plc are building an office tower nicknamed the Walkie-Talkie in the City of London district as well as offices and shops in the Victoria area to capture higher rents and values amid a shortage of space under development.
The Walkie-Talkie “is now 56 percent pre-let or in solicitors’ hands, a year ahead of completion, demonstrating clear demand for the right space in the right location,” Chief Executive Officer Robert Noel said in the statement. “Our relentless asset management has reduced voids even further.”
Land Securities rose 5.4 percent in London trading, the biggest gain since January 2012. The shares closed at 985 pence, lifting this year’s increase to 21 percent and giving the company a market value of 7.71 billion pounds.
The company’s adjusted net asset value of 903 pence beat JPMorgan Chase & Co.’s estimates amid higher-than-expected profit from the development pipeline, analysts including Harm Meijer said in a note to investors. JPMorgan has a neutral rating on Land Securities.
The company sees more value in development than investment at this time because there are few competitors, Noel said today on a conference call.
“The development market for us at the moment is lower risk because very few people can do it,” he said. “There such a lack of development finance. We don’t really want to compete in the investment market because we can make so much more money in development.”
Revenue rose to 736.6 million pounds from 671.5 million pounds a year earlier, the company said. Revenue profit, a pretax measure that excludes one-time items, fell 2.9 percent to 290.7 million pounds as asset sales reduced recurring income. Like-for-like vacancies fell to 2 percent from 2.8 percent.
Adjusted earnings per share declined 4.4 percent to 36.8 pence, exceeding the 35.8 pence average of 17 estimates in a Bloomberg survey.
A Land Securities and Canada Pension Plan Investment Board joint venture will begin developing a 768 million pound office and retail development in Victoria in June. The company and Frogmore Real Estate Partners Investment Management Ltd. in January won planning permission to build stores on London’s Oxford Street, the U.K.’s busiest shopping strip.