Land Securities Group Plc slashed the value of its properties by 945 million pounds ($1.2 billion) as the coronavirus pandemic forces thousands of stores to close.
The company, one of the UK’s largest real estate investment trusts, incurred most of the damage in retail assets that were written down by more than 20% outside London and about 17% in the capital, according to its half-year earnings statement on Tuesday. So far it has collected 78% of the rent owed in September, but only half of monies owed by regional retail tenants.
The combination of the valuation fall and lower rent collection forced the company to an 835 million pound loss before tax. “While the results clearly show the impact of the pandemic on our business, Landsec remains in a fundamentally strong position,” Chief Executive Officer Mark Allan said.
Commercial property landlords have been hit hard by the pandemic, as trophy office buildings in city centres remain deserted and online shopping becomes the norm amid a resurgent virus and renewed lockdowns. Land Securities’ shares had lost around half their value this year, before getting a more than 20% boost when news of successful Covid vaccine trials saw markets surge worldwide.
“The path out of the pandemic — through higher testing volumes, more effective treatments and ultimately a vaccine — is increasingly clear, although the length of that journey and the related economic cost less so,” Allan said.