Land Securities reports progress on Leeds scheme

The blue-chip landlord said it would pump 655m into three new projects in London, signalling preference for construction over acquisitions, amid fears UK commercial property prices are overheating just four months after the market bottomed out.

Works on the three schemes at Park House in Mayfair, and Wellington House and Selborne House in Victoria, will begin in the first and second quarter, with completions due in 2012 and 2013, Land Securities said in a third quarter trading update.

"Our financial strength allows us to be first off the block with our London development program," Chief Executive Francis Salway said, pointing to almost 40m of new lettings in its first three fiscal quarters.

News of the development plans comes just two days after benchmark provider Investment Property Databank revealed average UK commercial property values rose 3 per cent in December, their highest monthly gain in 23 years.

Together the projects will provide more than 500,000 square feet of new office and retail space, plus a further 120,000 square feet of residential accommodation, marking a change in company strategy.

Land Securities has trimmed its net borrowings to 4.15bn from 4.35bn at September 30. It posted a third interim dividend payment of 7 pence per share.

Land Securities owns 100 per cent of the 650m Trinity Leeds shopping complex after buying out partner Caddick Developments.

The Trinity Leeds scheme is due to open in October 2012 and work will start on the site in late Spring this year.

The company said today: "We also continue to make good progress with retailer discussions in relation to our proposed Trinity Quarter development in Leeds. During the quarter we concluded a number of lettings with further lettings in solicitors' hands, and we are making progress toward our pre-let threshold before committing to the start of the development."