LONDON -- Shares of Land Securities (LSE: LAND ) rose more than 3% to 966 pence in early London trading this morning, as the U.K.'s largest real-estate investment trust (REIT) released annual results for the year ended 31 March 2013.
The group, which owns 8.7 million sq. ft. of office and retail space in London and 18.4 million sq. ft. of retail and leisure space across the rest of the U.K. reported that pre-tax profits were up 3.4% to 533 million pounds, while net asset value (NAV) per share increased 4.6% to 903 pence.
Highlights for the year included the addition of 932,000 sq. ft. of new retail space in Leeds and Glasgow, opening almost fully let in March, plus news that 56% of its new "Walkie Talkie" tower development in the City is already pre-let or in solicitors' hands, a year ahead of the building's completion.
Revenue profits dipped by 2.9%, as previously guided, coming in at 290.7 million pounds -- due to a reduction in non-recurring income and the impact of selling investment properties ahead of finding new buying opportunities.
The first phase of construction at Victoria Circle in London's West End (a joint 700 million-pound venture with Canada Pension Plan Investment Board) is due to begin in June.
The board recommended a final dividend of 7.6 pence, taking the total for the year up to 29.8 pence per share -- a 2.8% increase.
Commenting on the results, chief executive Robert Noel said:
We went into the year with a clear plan. In London, we prioritised development over property investment, as we continued to believe this would generate substantially higher returns at this point in the cycle. In Retail, we focused on delivering our big schemes, increasing our exposure to the leisure sector and finding new ways to respond to retailers' changing needs.
This activity led to robust financial and operational results. Total Business Return was 8%. Revenue profit at £290.7m and adjusted diluted earnings per share at 36.8p were better than we expected at the beginning of the year. And we managed our void levels well, reducing them from 2.8% to 2% on a like-for-like basis.
With Land Securities shares currently trading at over a 60 pence premium to their NAV and a forward P/E of 24.3, only you can decide whether they represent a buy at this price. Indeed, broker opinion remains divided: eight brokers currently rating the shares a strong buy and nine as a hold.
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