Property performance warning from Land Securities

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by Lin Freestone

A warning has been issued by Land Securities that the faltering economy could lead to further falls in capital values in the property sector. There has been a slight rise during the second quarter in the amount of empty property held by the company to 3.5%.

During the three months to June, Land Securities continued to make progress on lettings and asset sales but at a slower rate, which reflects the wider market conditions. Transactions are taking longer and the company is realistically cautious for the longer term.

The UK’s biggest commercial property company reports in its trading update that the demerger of its retail, London and outsourcing businesses is progressing. Proposals for the sale of its Trillium outsourcing division are still being evaluated and no further details are available.

When Land Securities announced its plan to split into three in November last year, its Trillium property management division was valued in the region of £1.4bn.

It was stated at the time that a division of Trillium and the company’s other two units, which focus on London and retail property investment, would take about a year to prepare. However, it has also been said that the sale would proceed only if it was in shareholders’ interests and when market conditions are favourable.

There is speculation that the sale is looking increasingly unlikely, however, as bids so far have failed to meet the company’s price expectations in a difficult climate.