Commercial property company Land Securities said Wednesday it continued to make good progress in the third quarter as it acquired development lettings and achieved strong operational performance across its investment portfolio.

The FTSE 100 group signed £10.8m in development lettings since October 1st, driven by a London portfolio to the tune of £5.8m and a further £8.6m in the pipeline.

London leases included offices and retail space in the city, West End, Victoria and Buckingham Gate.

The offices of shopping centre One New Change in London's Cheapside were fully let and retail space 99% leased.

The company attained £9.2m worth of investment lettings with an additional £7.8m in solicitors' hands.

Voids in the like-for-like portfolio were up 2.9% at December 31st due to the vacating of 1 New Street Square, EC4, a pre-development property off Fetter Lane, London, described as a 'green' cluster of buildings which include grass roofs and a wall of plants. Units let on a temporary basis and others pending red-tape formalities accounted for the void.

Despite the collapse of retailers Jessops, HMV and Blockbuster, the retail portfolio of units in administration were down 1.5%, with 22% still trading. Overall occupancy rate for retail stood at 97.1%.

The total investment in the quarter came to £248.1m, including capital expenditure on developments of £76.8m.

Land Securities Chief Executive, Robert Noel, said he was pleased with the performance during the period.

"This was a good quarter with continued momentum in development lettings and a strong operational performance across our investment portfolio," he said.

"Encouragingly, interest levels in both our London and retail portfolios remain high.

"There remains a high level of activity across our investment portfolio and we have continued to manage space effectively with voids largely unchanged. Both our portfolios are well positioned for what remain challenging wider economic conditions."

He said he was confident the group would continue to deliver growth for shareholders as they planned to invest in further developments and had high interest in schemes.

Shares fell 0.06% to 805.00p at 14:00 following forecasts from Investec which retained its 'hold' rating on the company at an 825p net asset value-derived target price.

"Void and tenants in administration metrics are not troubling, but we still expect earnings to fall by about 10% in the year to March, as properties are taken out of the rental portfolio for redevelopment," the analyst said.

"The dividend is comfortably covered, but the earnings trajectory, albeit short-term, we view as inappropriate for the largest (real estate investment trust)."

RD

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