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Retail closures hit Land Securities' portfolio, loss widens

[BENGALURU] Property developer Land Securities Group on Tuesday reported a bigger loss for the year due to a steep decline in the value of its assets, as a string of collapses on Britain's high street led to higher vacancies.

A series of company voluntary agreements (CVA) — an insolvency procedure used by retailers to restructure leases — had led to uncertainty over the value of the income from retail properties and many British property developers have been looking to move away from the ailing retail sector.

Many retail firms are also shutting down stores to cut costs and focus on online space, dealing a blow to real estate firms that get a large chunk of their business from retailers.

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The new chief executive of rival Intu Properties cut the shopping centre operator's rental income forecast on Friday, blaming a string of retail collapses and uncertainties stemming from Brexit for slowing down new lettings.

Land Securities, which manages the Bluewater shopping centre in southeast England, reported a loss before tax of 123 million pounds (S$218 million) for the year ended March 31, compared with a loss of 43 million pounds a year ago.

"We see no near-term improvement in retail market conditions, with CVA activity set to continue. Rental values are likely to decline further in shopping centres and retail parks," Chief Executive Officer Robert Noel said, adding he expects rental growth in outlets and select leisure destinations.

However, the company reported an 8.9% rise in revenue profit to 442 million pounds, helped by income from completed developments, high occupancy, higher rent and by refinancing some bonds in the previous financial year.