The UK’s largest listed commercial property firm Land Securities (LSE: LAND) earlier this week announced the sale of The Printworks in Manchester to real estate management firm DTZ Investors for £108m. Redeveloped and reopened in 2000, Land Securities’ asset management has created value at The Printworks resulting in the lowest level of vacancy rates for a number of years.
It’s all REIT
The news follows another disposal in January when it sold The Cornerhouse in Nottingham to Orchard Street , the specialist commercial property investment manager for £65m. Again, the sale of the property capitalises on the increased rental value it has created following its asset management strategy.
Land Securities is perhaps best known for its portfolio of prestigious London office buildings, but in recent times has shifted its focus towards retail and leisure properties where high demand is helping to support revenues and profits. The company is the largest of four property firms operating as Real Estate Investment Trusts (REITS) in the FTSE 100 with a £14.5bn portfolio totalling 23.6m sq ft. In London alone the company owns and manages a portfolio totalling more than £8.2bn.
Ex-dividend
For me there’s no easier way to gain exposure to the property market than to invest in REITs. With its exposure to prestigious London office space, shopping centres and entertainment assets Land Securities provides investors with some degree of diversity, although the uncertainty relating to Brexit has increased the risk level of the entire sector.
Despite the uncertainty, investors can continue to benefit from the company’s improving dividend payouts. The latest quarterly instalment of which will be paid on 7 April, with the shares going ex-dividend on 9 March. For growth seekers there is steady mid-single-digit earnings growth anticipated over the medium term, but the main attraction remains the dividend which has been growing nicely since 2010, and currently yields 3.4%.
Cheesegrater
For those seeking more bang for their buck, perhaps a more lucrative option might be British Land (LSE: BLND). Slightly smaller than Land Securities, it is valued at over £6.4bn and generates revenues of almost £600m a year. Only yesterday the property giant confirmed that it had agreed the sale of the Leadenhall Building, the tallest skyscraper in the City of London, commonly known as The Cheesegrater.
British Land owns the famous skyscraper situated at 122 Leadenhall Street in the Square Mile in a 50/50 joint venture with Toronto-based Oxford Properties. The landmark building will fetch a staggering £1.15bn once the deal is approved by the buyer’s shareholders, reported to be China’s CC Land. The sale shows continued investor confidence in the market, particularly for well-located property in London.
British Land’s share price has fallen since the Brexit vote, but long-term shareholders won’t be overly concerned as long as the dividend payouts continue to rise. In common with Land Securities, the company boasts uninterrupted dividend growth since 2010, but offers a far more generous payout with a prospective yield of 4.8%.
