Land Securities sees resilient performance despite Brexit pressure

By Esha Vaish

(Reuters) - Land Securities (LAND.L), Britain's largest listed property developer, said it expected its retail and London offices portfolio to show resilience in a market weakened by the vote to leave the European Union.

Although companies were taking longer to sign office leases and some were asking for longer rent-free periods, Land Securities' long leases of 10 years on average should insulate it against any dip in demand, Chief Financial Officer Martin Greenslade told Reuters.

"We're in as a good a place as we possibly could be for the current market," Greenslade said.

Land Securities, the developer of London's "Walkie Talkie" skyscraper at 20 Fenchurch Street, said the decline in its portfolio value (NAV) over the six months ended Sept. 30 had been less than the fall in the wider market.

It also increased its interim dividend payment by 9.8 percent and its shares, part of Britain's FTSE 100 index of leading stocks, rose 2.3 percent to 1,008 pence.

Britain's property market was one of the biggest victims of the turmoil following the June 23 Brexit vote. Several commercial property funds were suspended at one point on redemptions due to concerns that firms would leave for Europe and housebuilders were hit by worries that fewer people would buy flats.

Although commercial and residential property data has since indicated improved trading conditions, many fear that these markets may see further pain when Britain begins its divorce from the EU next year.

SLOWING MOMENTUM

Momentum has slowed in the commercial construction market, with 40 new schemes started over the past six months, Deloitte's Winter 2016 survey showed, down from 51 schemes in its previous survey. Housebuilders have also reported pulling back on land purchase plans.

However, in the short-term stocks of property companies have pared some of their losses as the immediate outlook stabilises.

Housebuilder Crest Nicholson (CRST.L) reported a recovery in new home demand, which Peel Hunt analysts said put it on course to meet its 2019 revenue target and make strong payouts. They have a "buy" rating on the stock.

Retirement home builder McCarthy & Stone (MCS.L) also maintained its medium-term target of building and selling 3,000 units every year, as it reported higher weekly net reservations for the first 10 weeks of its current year.

Land Securities' six-month adjusted diluted NAV fell 1.8 percent to 1,408 pence per share.

Peel Hunt analysts, who have an "add" recommendation on Land Securities, said better-than-expected results set its shares up to narrow their discount to NAV.

"(Land Securities) portfolio was more defensive than we had expected but the devaluation of the UK commercial market is under way," wrote Jefferies, which has a "hold" recommendation on the stock.

This would be a "tough act" for rival British Land (BLND.L) to follow in its results on Wednesday, they added.

(Reporting by Esha Vaish in Bengaluru, additional reporting by Noor Zainab Hussain; editing by Jason Neely/Keith Weir)