Land Securities Wins Approval for London Victoria Project

Land Securities Plc won local-government approval for what could be its most profitable development project, a plan to turn an office tower in London’s Victoria neighborhood into 206 apartments.

Home prices in the borough of Westminster, where the local council voted in favor of the project yesterday, have soared in the past year. Prices in the U.K. capital rose 10.6 percent in the year through March 13, led by a 38.7 percent gain in Westminster, according to an Acadametrics Ltd. study released May 10. The average home in the borough costs 1.26 million pounds ($1.9 million), according to the research firm.

Land Securities, the U.K.’s largest real estate investment trust, may make more than 230 million pounds of profit by converting the 101-meter (330-foot) Portland House tower into homes, JPMorgan Chase & Co. analysts including Harm Meijer wrote in a June 26 note to clients. That would make it the London-based REIT’s most profitable development, they wrote.

The “vast majority” of Land Securities’ residential development sites by value run from central London’s affluent Belgravia district through Victoria to St. James’s Park, Chief Executive Officer Rob Noel told analysts on a May 15 call.

“We control that market and it’s prime and it’s very attractive,” Noel said. “We’re absolutely in the right location.”

The project was approved by a vote of five to one, subject to Land Securities providing 63 homes in the district at below-market value, and a payment of about 12.5 million pounds toward other affordable properties.

(Adds vote result in sixth paragraph.)
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