Landsec has reported a 59% drop in profit before tax to £98m in its first half results.

In the six months to 30 September, the commercial property development and investment company’s basic earnings per share (EPS) fell by over 60% to 13p, while its total return on equity fell from 3.9% to 1.2%.

However, in this period, its earnings increased by 3% to £192m, while like-for-like net rental growth jumped 5%. Landsec’s occupancy stood at 96.7% on 30 September, rising by 0.5% year-on-year.

Furthermore, its retail sales grew by 7.7%, with Landsec stating that this highlights the attraction of "top destinations for brands".

Chief executive at Landsec, Mark Allen, said the firm continues to see "clear positive momentum across every part" of the business, notwithstanding the wider economic environment.

He added: "Owning the right real estate has never been more important, so we continue to benefit from our proactive portfolio repositioning over the last few years, and our entire business is also benefitting from a sharper focus on sustainable EPS growth as our primary performance objective, providing greater clarity in terms of priorities and decision making."

Despite its drop in profit, the firm expects its like-for-like net rental income for 2026 financial year to grow by between 4% to 5%, up from between 3% and 4% growth.

Furthermore, Landsec is expect its EPS growth to reach the top end of its 2% to 4% guidance range, with overhead costs set to reduce to the low £60m range by the 2027 financial year, against a previous estimate of below £65m.

Although the property and investment firm has increased its guidance, shares in Landsec fell by over 3%.

Head of markets at AJ Bell, Dan Coatsworth, concluded: "Landsec might have expected a slap on the back rather than a slap in the face from the market after raising guidance in its first-half results.

"The company is not helped by a negative backdrop for domestic-facing businesses as investors react badly to news Rachel Reeves is set to U-turn on an increase in income tax in the upcoming Budget.

"The underlying picture for Landsec is positive with high occupancy, rent increases and material earnings growth. Having taken some pain while getting rid of the lower quality parts of its portfolio, Landsec will hope that over time it gets credit from the market for having a better collection of assets with more significant earnings potential."

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