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LONDON-Land Securities Group and British Land Co. rate as the top two largest real estate investment trusts in the United Kingdom, according to an Arlington, VA-based SNL report, though the companies have almost opposite property positions. British Land, focused on retail, is buying, whereas Land Securities handles offices and hotels and is selling, said SNL analyst James Mathieu.
Together, the two locally based firms average nearly 50% of the market share of the UK REITs during the past 10 years, Mathieu said. The two trusts own nearly 100 million square feet in operating real estate properties with more than 98% of the portfolios in the United Kingdom. Hammerson, Capital Shopping Centres Group, Derwent London and Segro round out the top six in the recent SNL list.
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Even at the top, the two companies appear positive but are struggling against the European crisis. Both companies continue to outperform the broader UK REIT market, but both have posted negative total returns during the past 12 months, Mathieu said. Land Securities has a market cap at $8.6 billion, but had a negative 5.14% one-year return, while British Land has a market cap of $6.8 billion but had a negative 8.49% one-year return.
The fall of retail rents in Europe will pose a challenge to British Land, with 63% of the company’s portfolio held in the retail sector. The company operates 356 total properties, with the rest made up of mostly office and specialty sites, and the firm has spent millions more on purchases than on sales in the past 12 months.
Conversely, Land Securities has only bought $116 million in property in the past year, while it has sold about $1.3 billion, the largest being Arundel Great Court on March 31 for $378 million. The trust concentrates more on offices and hotels, with only 38% locked in retail. The trust has fewer properties than British Land, at 105, but with more property at 61.3 million square feet.
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