Land Securities demands clarity on terms of BrexitComments Off on Land Securities demands clarity on terms of Brexit
The UK’s biggest property company has sounded the latest warning over the impact of Brexit on the capital as potential occupiers sit on their hands in the wake of the referendum and rents fall.
Land Securities chief executive Rob Noel told the company’s annual meeting: “We expect business uncertainty to persist until there is more clarity on both the timing and terms of the UK’s exit from the EU.
“This process may take some time. Demand from occupiers is likely to be subdued until confidence returns and this may have an impact on rental values.”
Noel’s warning echoes that of British Land chief executive Chris Grigg, who also expects occupiers and investors to take a “more cautious approach” following the vote.
Land Securities has an £8.2 billion portfolio in the capital including the Walkie-Talkie skyscraper.
The Walkie-Talkie, developed by Land Securities and Canary Wharf Group in the wake of the financial crisis, signed up its final tenant earlier this year.
But doubts have been cast over a number of projects, including Axa’s planned 22 Bishopsgate skyscraper, as worries persist over the fate of London’s dominant financial sector.
Noel stressed that Land Securities’ low borrowing, high occupancy levels and long-lease terms “put us in an excellent position”, underpinning the planned 9.9% increase in the dividend. The firm’s undrawn banking facilities also give it the firepower to pick up any potential bargains coming onto the market in the wake of the vote.
Land Securities has looked to reduce risk by selling off older office buildings as well as shopping centres in less-attractive locations, “de-risking” the business ahead of a downturn, according to Liberum Capital.
Analyst David Brockton said: “This should help lessen any downside into a correction and support outperformance into recovery.
“However, these actions do not completely remove risk and we still see its large London office portfolio as susceptible to weakening occupier demand.
“With demand uncertain and rising supply certain the rental growth attraction for London offices is limited and a discount justified.”