By Esha Vaish
(Reuters) – Land Securities Group Plc <LAND.L>, Britain’s largest listed property developer, set a larger payout after a boom in demand for commercial property boosted its net asset value.
Shares in the developer of London’s famed “Walkie Talkie” skyscraper rose as much as 2.7 percent and were the top gainers on the bluechip FTSE-100 index <.FTSE>.
The company said its adjusted diluted net asset value – a key measure for developers as it reflects the value of their buildings – rose 27.6 percent to 1,293 pence per share in the year ended March 31. It raised its dividend to 31.85 pence from 30.7 pence.
Panmure Gordon analyst Sue Munden wrote in a note that she would increase her net asset value expectations for financial year 2016 after Land Securities’ strong results. She currently expects a 2.8 percent rise in net asset value to 1,328.6 per share.
Companies are quickly renting up office spaces in London and other UK cities as they feel surer about growth in the economy and as cheap credit boosts buying and selling of property.
Walkie Talkie, a 37-storey glass office block at 20 Fenchurch Street, was 92 percent let, Land Securities said, with the amount of vacant space in its portfolio having fallen to 1.1 million square feet at March-end, from 1.7 million a year earlier.
The skyscraper was one of the projects that Land Securities restarted in London after the 2007 financial crisis in a bet that the British capital’s office market would face a shortage of space.
Land Securities, however, said on Tuesday it would not add to its speculative development program that ends in July 2016.
Rival British Land Company Plc <BLND.L> said last week that it expected to spend 378 million pounds ($590 million) on development over the next three years.
“We’re in a position where we don’t think we’d be adding new speculative development stuff because we’re competing with a crowd of people and that just means that the risk dynamics changes,” Chief Executive Robert Noel told Reuters.
Land Securities and British Land were the first to build speculatively after construction plummeted during the downturn, as they anticipated a shortage of premium commercial space.
Their flagship towers, the Walkie Talkie and Cheesegrater respectively, were considered risky bets when they were built in 2010 but both were over 80 percent let at the end of financial year 2015.
($1 = 0.6405 pounds)
(Reporting by Esha Vaish in Bengaluru; Editing by Anupama Dwivedi)