Land Securities (LON: LAND) lifts FY26 EPS guidance on retail-led rental strength, targets 62p by FY30

Land Securities Group PLC has raised its full-year EPRA EPS guidance and upgraded its medium-term earnings growth outlook following a half-year period marked by strong like-for-like rental income growth, increasing occupancy, and effective cost management. For the six months ended 30 September 2025, the United Kingdom-based real estate investment trust posted a 3.2 percent year-on-year increase in EPRA EPS to 25.8 pence. This improvement was driven by a 5.2 percent uplift in like-for-like net rental income and a further 6 percent reduction in overheads. The interim dividend rose 2.2 percent to 19.0 pence.

Despite reporting a lower IFRS profit before tax of £98 million versus £243 million in the prior-year period, due to £67 million in disposal-related losses, Land Securities reaffirmed its conviction in its long-term income strategy. The group now expects FY26 EPRA EPS to come in at the upper end of its previous 2–4 percent growth guidance range and has raised its FY30 EPS target from approximately 60 pence to 62 pence. This translates to a compound annual growth rate of 4–4.5 percent from FY25 levels, reflecting higher income from retail, further efficiency gains, and limited new development activity.

The company’s capital recycling activity during the period included the sale of £644 million worth of assets that were delivering limited or no returns. While the sales reduced the group’s EPRA NTA per share by 1.3 percent to 863 pence, analysts covering the real estate investment trust noted that the transactions helped streamline the portfolio and enhanced future income potential.

What is driving Land Securities’ upward revision in EPS guidance despite lower IFRS profit?

The reported profit before tax decline stemmed from a one-off loss on disposals, particularly the sale of the QAM property, which converted future lease income into an immediate cash receipt. While this resulted in a short-term drag on profits, management emphasized the move’s earnings-neutral impact over time and its role in strengthening cash flows. Importantly, EPRA EPS, which is a key performance metric for REITs, still rose by 3.2 percent, highlighting the underlying rental strength and cost discipline.

The company is now projecting FY26 EPRA EPS growth at the top end of its 2–4 percent range and has revised its FY30 target to 62 pence. This medium-term upgrade factors in accelerating retail income, additional cost savings, and reduced development spend, positioning the REIT for sustained capital efficiency.

How strong was the rental performance across Land Securities’ office and retail portfolios?

The like-for-like rental income performance stood out in both the office and retail platforms. In offices, Land Securities achieved 6.8 percent growth in net rental income, supported by strong occupier demand for premium space. EPRA occupancy for the office portfolio rose by 50 basis points to 98.8 percent, with lettings signed or in solicitors’ hands being agreed at 9 percent above estimated rental value. Relettings and renewals were struck at a 6 percent premium to the previous rent. The company reported 3.1 percent growth in ERV over the half and maintained its full-year expectation of a similar increase to FY25’s 5.2 percent growth. Reversionary potential in the office portfolio is now estimated at up to 12 percent, which the company believes will continue supporting like-for-like income gains in the near term.

Land Securities is nearing completion of £866 million in office developments expected over the next six to nine months, which are forecast to generate a gross yield of 7.0 percent on cost. The company reported encouraging early customer engagement and expects a meaningful level of pre-letting in the coming months. On the disposal side, Land Securities sold £295 million worth of office properties during the period, exceeding internal timelines, as capital market activity in the sector gradually improves. While the office portfolio saw a marginal 1.0 percent decline in valuation, the company attributed this to early income recognition at QAM and the impact of a five-yearly business rates reassessment at Piccadilly Lights.

What are the retail income signals telling investors about post-pandemic recovery and asset quality?

In retail, the real estate investment trust reported a 5.0 percent increase in like-for-like net rental income and a 7.7 percent year-on-year rise in retail sales across its leading assets. EPRA occupancy remained stable at 96.7 percent, while new lettings or deals in solicitors’ hands were signed at 10 percent above ERV. Relettings and renewals in retail delivered a 13 percent premium to previous rents, signalling sustained demand for quality retail destinations. Retail ERV grew by 2.2 percent during the half, broadly tracking the company’s full-year forecast and last year’s 4.0 percent performance.

With high tenant demand and improving sales metrics, Land Securities expects to extract 4.5 to 7.0 percent compound annual growth in retail income from its existing portfolio over the next five years. The growth will be driven by capturing reversion, turnover-linked rents, commercialisation, and selective capital expenditure. The company plans to invest a further £1 billion in retail-focused opportunities over the next one to three years. Notably, the valuation of the retail portfolio rose by 2.3 percent during the half-year period.

How is Land Securities balancing capital recycling, leverage targets, and development slowdown?

From a balance sheet perspective, Land Securities’ pro-forma loan-to-value ratio stood at 38.9 percent following the period-end disposal activity. Net debt increased slightly to £4.4 billion, and the net debt-to-EBITDA ratio was 8.6x. The company reiterated its ambition to reduce this ratio to below 7x over the next two years. Average debt maturity remained strong at 8.9 years, with no refinancing obligations until 2027. The company signalled that its overall LTV would gradually reduce to below 35 percent over time, aligning with improved earnings and reduced development exposure.

Looking forward, Land Securities confirmed it would not be committing significant capital to new development over the next 12 to 18 months. Committed development is expected to reduce to approximately £200 million by mid-2026, significantly down from the current £1.1 billion. Future investment activity will be focused predominantly on income-yielding retail opportunities.

What is the long-term outlook for Land Securities’ residential pipeline and its income diversification strategy?

In addition to its core office and retail platforms, Land Securities is progressing its residential development ambitions. The group has secured planning approval for 879 homes at Mayfield in Manchester and for 2,800 homes in Lewisham, London. These permissions mean that the majority of the 9,000-home pipeline now has planning clearance. The company is actively working with public sector partners and sees the potential to create a residential platform exceeding £2 billion in value. Land Securities believes this segment could provide higher income growth and lower earnings cyclicality over the medium term.

What signals are institutional investors and equity analysts watching most closely as Land Securities enters FY26 with upgraded EPS guidance and tighter leverage targets?

Institutional investors and equity analysts tracking Land Securities appear to be largely supportive of its capital discipline and income-led strategy. Although the headline decline in IFRS profit and return on equity to 1.2 percent (from 3.9 percent) may raise concerns among some market participants, the company’s focus on improving operational earnings, asset quality, and balance sheet resilience is expected to remain a core component of investor evaluation in the upcoming quarters.

The company’s stock price declined 3.86 percent intraday on 14 November 2025, closing at 622 pence, with recent volatility attributed in part to mixed investor sentiment following the QAM disposal and macroeconomic uncertainty in the commercial property market. However, with EPRA occupancy at 97.7 percent, its highest level in nearly a decade, management is confident about the company’s reversion capture prospects and dividend growth potential heading into FY26.

Land Securities’ revised long-term EPS target, tighter leverage strategy, and ongoing pivot toward income-yielding retail and residential assets mark a clear evolution in its business model. As retail momentum strengthens and development exposure declines, the company believes it is entering a more stable and cash-generative growth phase that could appeal to income-focused investors and REIT allocators in the United Kingdom and beyond.

What are the most important takeaways from Land Securities’ FY26 outlook and H1 FY25 results?

• Land Securities Group PLC raised its FY26 EPRA EPS growth guidance to the upper end of the 2–4 percent range and lifted its FY30 EPS target from 60 pence to 62 pence, implying a 4–4.5 percent compound annual growth rate from FY25.
• EPRA EPS rose 3.2 percent year-on-year in H1 FY26 to 25.8 pence, supported by a 5.2 percent increase in like-for-like rental income and a 6 percent reduction in overheads.
• IFRS profit before tax declined to £98 million from £243 million, largely due to a £67 million loss on asset disposals, particularly the QAM transaction.
• Dividend per share increased to 19.0 pence, reflecting a 2.2 percent rise in line with EPRA earnings growth.
• Office portfolio saw 6.8 percent like-for-like rental income growth with 98.8 percent EPRA occupancy and 9 percent leasing premiums over estimated rental values.
• Retail income grew 5.0 percent like-for-like, while retail sales rose 7.7 percent, and new leases were signed at 10 percent above ERV.
• Retail portfolio valuation increased by 2.3 percent, and office portfolio declined by 1.0 percent due to QAM-related accounting and business rate reassessment.
• Capital recycling continued, with £644 million in low-return assets sold, helping reduce exposure and improve portfolio efficiency.
• Net debt stood at £4.4 billion with a net debt-to-EBITDA ratio of 8.6x, but the company reaffirmed its target to reduce this below 7x within two years.
• Committed development pipeline is expected to decline to £200 million by mid-2026, with no major new developments planned in the next 12–18 months.
• The residential pipeline advanced with planning approval for more than 3,600 homes, part of a 9,000-unit pipeline aimed at building a £2 billion-plus platform.
• EPRA occupancy reached 97.7 percent, the highest in almost a decade, reinforcing near-term rental reversion potential across the portfolio.
• Investors and analysts are closely tracking execution on leverage reduction, continued rental income growth, and delivery of the upgraded EPS targets heading into FY26.