Landsec has announced a "disappointing" set of full-year results, according to Quilter Cheviot, as its earnings increased by 0.8% year-on-year to £374m.

The commercial property development and investment firm saw its combined portfolio size increase to 9.2% to £10.8bn in the year to the end of March, although its net debt jumped by 22.4% to £4.3bn.

Landsec also reached a profit before tax of £393m in this period, after recording a £341m loss in the previous year.

Chief executive officer at Landsec, Mark Allan, said: "Our portfolio again delivered very strong performance with like-for-like net rental income growth of 5%, supporting growth in both earnings and portfolio valuation over the year. Owning the right real estate has never been more important and, with a very healthy pipeline of occupier demand, this trend looks set to continue, providing a clear trajectory for further near and medium-term earnings per share growth.

"Our undoubted portfolio quality is a result of proactive and successful capital recycling over recent years and this will continue to be a focus for us. Our capital allocation decisions from here are about ensuring that the growth outlook for our portfolio in three to five years' time is as positive as it is for our current portfolio today."

While Landsec said it is mindful of the recent rise in global economic uncertainty, it has yet to see any impact on customer demand or investment markets.

As a result, its outlook for return on equity remained positive.

Although the property investment firm’s net asset value (NAV) grew by 1.7% in the year to the end of March, head of property research at Quilter Cheviot, Oli Creasey, pointed out that the vast majority of this result "occurred in the first half", with just a 0.3% increase in the second half.

This performance has resulted in a 1% drop in NAV compared to expectations.

Creasey concluded: "After a positive first half, Landsec’s full year results are a little disappointing. UK property benchmark indices have continued to see capital growth, around 2% in six months to March, so it is disappointing that Landsec has not been able to keep pace with that. It appears that specific factors may be to blame, notably a sharp fall in value of one Central London property (soon to be vacated) and goodwill write down, plus devaluation of ongoing and soon to be started development projects.

"Rental growth continues to be strong, though, with rents up 5% like-for-like during the year. However, earnings are largely unchanged, primarily due to property disposals, with nearly £500m sold in the year.

"Earnings are in line, but the NAV miss is slightly troubling. Analysts had expected Landsec to accelerate in H2, but growth has stalled. The hope is that this is a temporary stutter rather than a false start."

---