This year we saw a correction in the property market, turbulence in the financial markets and uncertainty in the wider economy. Our Chairman, Paul Myners, assesses our response and discusses what changing conditions mean for the Company.
Land Securities is a well-managed company that thrived during an extended run of good market conditions. This year there was a market correction. Property values have reflected changes in interest rates and risk premia margins. Our sector does not operate in isolation from the credit market and the wider economy.
We anticipated these changing conditions and have been preparing the Company accordingly. We limited acquisitions, accelerated sales, reduced our exposure to development risk and planned our funding conservatively. We keep an old fashioned focus on costs, spending only when necessary and productive. Our three businesses are in good shape as a result.
Successful companies respond early to change. The actions we took this year demonstrate strength. We will continue to be decisive and to make the most of our skills and competitive advantages in the current demanding conditions.
Land Securities has a long and proud history of managing itself well through a range of market conditions. We always look to move forward, even when progress demands bold decisions.
Back in the 1950s, under the leadership of Harold Samuel, we entered into the property sector’s first convertible debenture agreement. This was criticised by some at the time but soon became common practice.
In the early 1970s we went against the prevailing trend in the sector and limited our borrowing, a decision that enabled us to bounce back from the property crash of 1974.
Looking at the Company in the early 1990s, we can see parallels with today. Chairman Peter Hunt wrote at the time: “The fundamental principles on which Land Securities has been built are helping us through the most difficult period for the property industry that I can remember.”
Those principles still hold true. Once again we are being bold with our plans for demerger. Our diversified business model has served us well but we believe specialisation will become increasingly appealing.