Page 1: Introduction
Land Securities is the UK's leading property company. It is quoted on the London Stock Exchange and is a member of the FTSE 100. Land Securities owns more than £12 billion worth of property across the UK. The company is responsible for over seven million square metres of commercial accommodation. Its main objective is to maximise returns for shareholders on the money they have invested through buying, developing and managing commercial property. It must ensure that the income it generates through these activities will provide a healthy return on the original investment.
Land Securities leases buildings to occupiers at rental levels which are influenced by market forces. These are determined by how much floor space is available at any given time and the level of demand from potential tenants who wish to occupy the space. Empty space means the asset is not generating income which could potentially impact on the return to the Land Securities' investor. Fully let buildings mean healthy income generation.
The commercial property market is cyclical. The demand for rented commercial property is set by the health of the economy and future expectations of economic growth. A growing economy means that firms expand which increases their requirements for business accommodation. An economy in recession means firms try to cut back and save costs. Land Securities relies on high levels of occupation of its properties to make sure maximum returns are made for shareholders.