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Landsec plans a major sale of part of its office portfolio to finance a shift into residential property, which the company believes will provide more sustainable growth and lower volatility.
According to its latest results, the FTSE 100-listed landlord intends to build a residential platform worth over £2 billion by 2030.
In its financial report for the year ending March 31, 2025, Landsec said it plans to execute the strategy by “redeploying” £3 billion of capital from office property, non-core investments, and low-yielding or loss-making development-phase assets.
In terms of office property, the company aims to reduce capital allocation in this segment by £2 billion over the next two to five years.
Nevertheless, Landsec stated: “We have strong confidence in the short-term income growth from our high-quality office assets in London.” However, in the long term, the company added, “supply is less constrained, and demand — and thus rental values — are likely to be more cyclical.”
“In contrast, housing demand is structural, being driven by long-term demographic trends,” the statement said.
“This means that residential income and values have historically been far less volatile — and we expect this to continue.”
The company is currently working on three large-scale housing projects. Infrastructure work has begun and demolition has been completed on the first phase of an approved scheme on Finchley Road (1,800 new homes in North London).
👉 Read also: Landsec paused construction of a £200 million office in Bankside.
Detailed planning for the first phase of the upcoming Mayfield project (1,700 homes) is expected in the second half of the year, with completion starting in 2026.
The company is also awaiting a decision on submitting a masterplan for 2,800 homes in Lewisham, South London.
Landsec also announced plans to invest an additional £1 billion in large-scale retail projects over the next one to three years.
Last year, the company invested £600 million in two retail destinations — Liverpool ONE and Bluewater — and sold off ageing hotels that required significant capital investment.
Revenue grew slightly, from £824 million to £842 million, and financial performance improved as Landsec swung from a loss to a pre-tax profit.
Pre-tax profit was £393 million, largely due to a portfolio revaluation. Net gain from revaluation of investment properties was £91 million, compared to a £628 million deficit last year, which had caused a £341 million loss.
CEO Mark Allan said:
“Our portfolio has again delivered strong results — net rental income rose by 5%, supporting both returns and asset values over the year.”
“It's never been more important to own the right real estate. Given strong occupier demand, this trend is likely to continue, delivering stable earnings per share growth in the near and medium term.”