Landsec said rents across its portfolio were growing at their fastest in nearly two decades, while occupancy is at a 20-year high, in final results for the year ended 31 March 2026.
The real estate investment trust, which has been pursuing office sales as it pivots towards major retail schemes and residential development, said the business was now lower risk with "clearer, stronger growth".
It said it believes that investment in major retail remains more attractive than office or residential development "at this stage".
"Our London office development programme will complete in the next few months, with our recently completed schemes now 54% let and strong interest in the remaining space. We have no plans to commit further capital to speculative office development as things stand, so our committed development exposure will be down to £0.2 billion by the end of the summer and we continue to make progress in releasing further capital from low/non-yielding pre-development assets.
Speaking to selected media, Mark Allan, chief executive, Landsec, said: "We are seeing the strongest occupier markets we have been reporting on in a generation. In between over those 20 years what has changed is the rapid emergence in technology affecting real estate. We can see now that the prime locations – the best retail and offices – are coming through as the clear winners in a tech enabled world. 2003 was the last time we reported occupancy at this level though.
"There are no signs of any slowdown in leasing momentum in the portfolio since the Iran conflict. That means we are reiterating our guidance. It is a lower risk profile, leasing up the portfolio and capturing the reversion. Less than 2% of portfolio will be in development by the summer of this year."
Allan said there were two key trends in real estate. The first was the "concentration of customer demand in the very best locations". The second is that it "is really difficult to deliver new supply".
"We continue to plan to recycle going forward but we are not relying on this. To some extent recovery in investment markets is being impacted by what is happening in the Middle East. We are looking to invest around £1 billion into expanding into major retail in the next few years. The business has clearly moved to lower risk, but the outlook for EPS growth is a clearer one. We were seeing about £3 billion of retail assets that are not held by natural long-term owners. We might see the Metrocentre [the major regional centre in Gateshead] come to market soon, for instance. We are likely to be focusing our efforts in these areas. We want to secure about 20% to 25% of those assets if possible but we will be disciplined."
Landsec posted European Public Real Estate Association earnings of £382 million, up from £374 million the prior year and a slight increase in earnings per share to 51.4p. Pretax profits slipped from £393 million to £346 million while net assets per share lifted to 882p from 877p. The group loan to value ratio has come in slightly to 38.7% from 39.3%. It added there was no need to refinance debt until 2028.
Landsec described earnings per share as being at the top end of guidance, up 2.2%, as 4.6% like-for-like income growth and a 15% fall in overhead costs more than offset an 1.8% earnings per share impact from the sale of the 102 Petty France site in Westminster, driving a 2% growth in the dividend.
It expects that full year like-for-like net rent in 2027 will grow 3-5%, with no signs of a slowdown in customer demand. It also expects earnings per share to see high single digit percentage growth, based on "current positive momentum in development leasing and like-for-like income growth"
Across the portfolio EPRA occupancy is up 80bps on a like for like basis to 98%, the highest level in two decades.
In offices, like-for-like income is up 6%, as its portfolio reversion rises to 17%. Occupancy is at a decade-high of 98.6%, while £21 million of lettings have been signed or in solicitors’ hands at 7% above estimated rental values (ERV) while relettings and renewals are 13% above previous rent.
Capturing reversion is largely reliant on lease events now that the portfolio is effectively full.
On the investment side, capital values are -0.1%, as strong ERV growth has been offset by 14 basis points yield softening and the 1.6% impact of higher build cost and business rates, with further mid-single digit ERV growth expected this year.
The period saw it sell £346 million of offices, capitalising on what it termed a "pick-up in investment market activity".
Landsec said in a statement: "We are ahead of plan in terms of releasing capital from offices. We will continue to look at further opportunities to recycle capital out of offices as our assets generally score well relative to current investor criteria and the upside to [earnings per share] from reinvesting this capital into retail at a circa 200 [basis points] pick-up in net effective income return and higher like-for-like income growth is meaningful."
Retail-led like-for-like income was up 5.5%, as rental uplifts more than doubled. Occupancy was up 100 basis points to a 20-year high of 97.7%. Values are up 4.6% driven by estimated rental value growth, with further mid-single digit ERV growth expected this year.
Landsec said it is selectively progressing "highly accretive capex projects, with decent visibility on future acquisition opportunities expected to come to market".
Landsec's committed development capex is down to £185 million with no meaningful new commitments planned in the next 18 months. It is prioritising new investment in retail given high income returns and high income growth. Committed development exposure is expected to come down to 2% of portfolio value in the next few months.
Landsec said progress is being made in preparing for medium-term residential-led opportunities.
The majority of its 9,000-home pipeline now has consent following the detailed planning consent for the first 879 homes at Mayfield, Manchester and outline/detailed consents for 2,800 homes at Lewisham, London.
It said there is an opportunity to build a £2 billion-plus platform with higher income growth and lower cyclicality in the medium term.
Landsec's over £10 billion portfolio is focused on workplaces, retail platform, and a residential pipeline.
Analysts at Panmure Liberum said: "Performance was increasingly driven by retail. Shopping centres delivered 4.8% valuation growth with 6.5% rental value growth. Retail-led assets generated a 4.6% valuation uplift overall, materially ahead of offices at -0.1%. While offices saw healthy ERV growth of 7.1%, particularly in the West End (+7.3%), this failed to translate into meaningful valuation growth as higher yields, build costs and rates pressure offset gains."