Property giant Landsec takes £500m hit as retail pain bites

Landsec, the UK’s largest property firm, on Tuesday warned that a wave of retail failures has dented the value of its empire by a whopping £557 million.

The Bluewater shopping centre part-owner, which is shifting its focus to London offices, said its portfolio value dropped to £13.8 billion in the year to March. That was driven by income falls in its shopping centres, retail parks and some central London stores.

The firm also suffered as numerous businesses closed shops or sought rent cuts using company voluntary arrangements.

Since the start of last year, more than 80 retail and food chains have gone into CVA or administration across the UK, affecting more than 6000 stores across the industry.

Rob Noel, Landsec’s chief executive, told the Standard: “Consumers are exercising caution and retailers are seeing their costs go up. There is increased stress for both parties.”

He predicted more chains would become distressed but called for “transparency” and “fairness” when tenants seek restructures. A number of landlords are concerned the CVA model is being abused by firms just trying to exit more expensive leases.

Noel was more positive about the London offices market. His firm is building 1 million square feet of space this year, half of which has already been pre-let to Deutsche Bank in the City.

The remainder will be built behind the Piccadilly lights and in Victoria.

Noel said: “We have seen London shrug its shoulders at the Westminster political gridlock and continue with office moves.”

The boss added: “The population is growing in London, vacancy levels are falling, and businesses want the best buildings to attract staff in the war for talent.”

Full-year revenue profits, which strip out valuation changes, rose 8.9% to £442 million.