Retail and office-focused Real Estate Investment Trust (Reit) Land Securities (LAND) has enjoyed a solid start to the year, but rival British Land (BLND) remains Shares’ preferred income stock in the sector. We suggest investors rotate out of the former and into the latter which offers 80 basis points more prospective yield and trades on a wider discount.
Acquisitions helped Land Securities, the developer behind the City of London’s iconic Walkie Talkie building expand its portfolio in the three months to July where it also signed pre-lets for its new properties. The £8.1 billion cap trades at a 6.1% discount to its projected £11.10 net asset value (NAV) to March 2015 and promises a prospective yield of 3.1%, analysts at Oriel Securities forecast which they say is below the 3.4% Reit average.
Meanwhile, British Land trades at a 6.6% discount to its 770p NAV per share and promises a 3.9% yield to March 2015. Land Securities’ retail assets are under scrutiny. It bought 30% of the Bluewater shopping centre in Kent for £656 million (25 Jun) on a 4.1% yield which looks expensive compared to the 4.8% Intu Properties (INTU) is enjoying on its stake in the Lakeside shopping centre in Essex.