Vacancy rate falls at Land Securities

Kasmira Jefford
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LAND Securities, the UK’s largest real estate investment trust by value, said vacancy rates fell in the past quarter as it confirmed it was stepping up its development activity as stronger retailers look to take new floor space.

The firm said yesterday it had cut its vacancy rate to 3.9 per cent at the end of June from 4.2 per cent at the end of March. It achieved £9.5m of lettings, showing an active demand for space amongst retailers.

Francis Salway, the group’s chief executive said: “The outlook for development in London remains attractive and, despite the mixed messages in the retail sector, our leasing activity demonstrates that the stronger retailers are looking to take new space.”

Income from disposals helped the company offset a fall in revenues after selling some of its developments to reinvest in new schemes.

Total sales in the quarter, including its Sainsbury’s supermarket site in Wandsworth - totalled £177.1m at 7.9 per cent above March 2011.

“What we have achieved in lettings and sales underpins our confidence in the plans that we set for the business,” Salway told City A.M.

Land Securities confirmed it has a £275m pipeline of opportunities in out of town areas to meet demand from retailers, especially supermarkets, but said it remained cautious over where it chose to buy new assets.

“We are taking care where we do developments outside London to make sure that it is supported by significant level of pre-lettings before we start,” Salway said.

Its units in administration increased to 0.9 per cent from 0.6 per cent in 31 March 2011 due to Focus DIY and Habitat collapsing into administration.

Adjusted net debt fell to £3.99bn compared with £4.18bn at 31 March.