Landsec FY25 results: £393m profit, 6.4% ROE, £3bn shift to residential and retail assets

Land Securities Group PLC (Landsec) reported a significant turnaround in financial performance for the fiscal year ended 31 March 2025, recording a profit before tax of £393 million compared to a £341 million loss in the previous year. The company’s strong results reflect a combination of like-for-like net rental income growth, a strategic shift in asset allocation, and rising demand across its Central London and major retail property portfolios.

The broader UK real estate investment trust (REIT) sector has been navigating rising interest rates, yield recalibrations, and evolving tenant priorities. Within this landscape, Landsec’s performance stands out as a case study in proactive capital recycling and focus on high-quality urban real estate—characteristics that are being increasingly rewarded by institutional investors post-pandemic.

What Are the Key Financial Highlights from Landsec’s FY25 Results?

The company’s EPRA earnings rose to £374 million from £371 million in FY24, underpinned by a 5.0% like-for-like (LFL) net rental income increase and improved cost efficiencies. EPRA earnings per share (EPS) rose marginally to 50.3 pence, while basic EPS surged to 53.3 pence, recovering strongly from a negative 43.0 pence in FY24.

Net tangible assets (NTA) per share rose to 874 pence from 859 pence, with a 1.1% increase in overall portfolio value driven by 4.2% estimated rental value (ERV) growth. Return on equity came in at 6.4%, a marked improvement from the negative 4.0% recorded in the prior year.

Dividend per share rose 2% to 40.4 pence, in line with guidance, signaling confidence in long-term cash flow visibility. However, the group’s loan-to-value (LTV) ratio increased to 39.3% from 35.0%, and net debt rose to £4.34 billion from £3.59 billion, reflecting increased investment activity.

How Did Central London and Retail Real Estate Drive Earnings?

Landsec’s Central London portfolio delivered 6.6% LFL net rental income growth, supported by 5.2% ERV growth. Occupancy in this segment rose by 120 basis points to 98.0%. Notably, relettings and renewals in this portfolio were completed at an average of 13% above previous rent, reinforcing the resilience of premium London office space.

Major retail saw a parallel uptrend with 5.1% LFL net rental income growth and 4.0% ERV uplift. Occupancy rose to 96.6%, with new leases or renewals signed at 11% above ERV. These gains were bolstered by strategic acquisitions such as Liverpool ONE and Bluewater, acquired for £610 million, generating an average income return of 7.7%.

Across both segments, the reversionary potential has increased, with Central London alone showing a 12% potential upside, suggesting more income upside in FY26 as current lease expirations are repriced.

What Is Landsec’s £3 Billion Capital Rotation Strategy?

In a major strategic announcement, Landsec outlined plans to rotate £3 billion of capital away from lower-yielding or pre-development assets—including offices and non-core investments—towards higher-return platforms in retail and residential.

By FY30, the company aims to invest £1 billion into its major retail platform and more than £2 billion into residential development. This shift acknowledges broader market trends, where retail’s performance has stabilised in key high-footfall destinations and residential real estate, particularly in urban centres, is gaining institutional interest due to structural undersupply.

To fund this transition, Landsec sold £496 million worth of non-core assets in FY25 and an additional £159 million after year-end. Most disposals were executed close to or just below book value, indicating disciplined asset management. Management expects further sales in early FY26.

How Well Capitalised Is Landsec to Fund Its Ambitious Plans?

As of 31 March 2025, Landsec had £1.1 billion in cash and undrawn facilities, a long 9.6-year average debt maturity, and pro-forma net debt/EBITDA of 7.7x. The LTV ratio remains below the 40% upper threshold, providing headroom for development funding.

The group also executed a £350 million 10-year bond issuance at a 4.625% coupon, alongside refinancing £2.25 billion of revolving credit facilities, locking in favourable terms before potential future rate hikes. These steps enhance the group’s liquidity and funding flexibility, crucial for its £2.86 billion committed pipeline.

What Progress Has Been Made in Residential Developments?

Landsec is laying the groundwork for its residential expansion strategy. Infrastructure works have started at the 1,800-home Finchley Road project in London’s Zone 2, and planning applications have been submitted for up to 2,800 homes in Lewisham and c.1,700 homes in Mayfield, Manchester.

These projects, if executed to schedule, will mark Landsec’s entry into the build-to-sell and potentially build-to-rent segments. Analysts believe the group’s residential strategy could benefit from high demand and constrained supply in London and key regional cities, though they also flag planning delays and build cost inflation as potential execution risks.

What Do Analysts and Institutional Investors Think About Landsec’s Results?

Early market reaction was subdued, with Landsec shares closing at 603.00 GBX on 17 May 2025, marginally down by 0.08%. Over the past 52 weeks, the stock has traded between 490.20 GBX and 691.50 GBX.

Institutional investors have responded with guarded optimism. The dividend increase and positive EPS trajectory reinforce earnings stability, but concerns remain around the execution of large-scale residential developments and the timing of returns from retail acquisitions.

However, the successful stabilisation in yields and modest recovery in UK commercial property valuations—particularly in London—could catalyse re-rating opportunities for Landsec in FY26. Analysts from several brokerages are maintaining “Hold” or modest “Buy” calls, citing a favourable long-term risk-reward profile.

What’s Next for Landsec in FY26 and Beyond?

Looking ahead, Landsec expects EPRA EPS growth of 2%–4% in FY26, and cumulative growth of around 20% by FY30. Operationally, the company anticipates further ERV increases in its core London and retail assets and plans to complete £860 million in developments during FY26, which are expected to deliver a 7.1% gross yield on cost.

Customer pre-letting activity for these developments is anticipated in the second half of FY26, with management noting early interest from occupiers. The company also targets over 10% in further overhead savings through FY26–FY27, reinforcing margin expansion ambitions.

With a clearly defined capital allocation roadmap, early-stage residential momentum, and favourable real estate pricing in targeted asset classes, Landsec appears to be pivoting decisively to capitalise on structural growth areas within the UK property market.