英国房地产提供GARP -偏好LAND：更新HMSO、BLND和LAND在3月底财年业绩后的预测

Restricted - External European Real EstateNEUTRALUnchangedEuropean Real EstatePaul May, CFA+44 (0)20 3134 1444paul.j.may@barclays.comBarclays, UKEleanor Frew, CFA+44 (0)20 3555 0748eleanor.frew@barclays.comBarclays, UKKanad Mitra+91 (0)22 6175 1793kanad.mitra@barclays.comBarclays, UK change in H225). As such, although the earnings growth outlook, post flat earnings in FY26E, issimilar to LAND, we see greater risks to growth and believe the group's more expensivevaluation (lower earnings yield) does not reflect the risk/growth. We reiterate our EW rating andraise our PT to 460p from 447p on updated estimates.Remain Underweight on Hammerson (new PT 260p):We update our Hammerson numbers toreflect a lower acquisition assumption. While the group noted an indicative opportunity set of£450-£500m in its FY24A results presentation (which we previously reflected in our forecasts),management noted that they are committed to the £350m reinvestment capital target notedpost the disposal of Value Retail. Now that the group has acquired a further c.59% interest inBrent Cross (taking its economic interest to 97%) for £215m, we estimate it has capacity toinvest a further £55m (post the disposal of Eastgate Leeds and assuming completion of £58m ofSBB in FY25). On our estimates, this takes LTV to 40% and ND/EBITDA to 9.0x, broadly in linewith LAND and BLND. Although we upgrade our EPS forecasts by 6.5% on average, largely dueto the Brent Cross acquisition yield and higher assumed interest income, we forecast lower LFLrental growth for HMSO due to lower starting reversion and forecast headwinds to earningsfrom refinancing in 2027. All told, we still forecast a marginal earnings decline over the next fiveyears and, therefore, continue to find the group's earnings yield of c.7% less attractive thanBLND's and LAND's (and relative to our Continental European Retail coverage URW andKlepierre). We reiterate our UW rating and raise our PT to 260p from 245p on updated estimates.2 Land vs. British Land: Growth strategies ultimatelynot thatdifferent,but we think risk levels areLandsec and British Land appear to be focusing on earnings growth, which we support. Landsecaim to grow EPS from 50.1p in FY25 to c. 60p by FY30E, implying a c.3.6% CAGR;British Land areguiding to flat EPS for FY26 and to 3-6% EPS growth p.a.thereafter.For Hammerson, we areencouraged by its recent acquisition of Brent Cross, which leads us to increase our FY25 EPSestimate, but we think the company is somewhat capital constrained and struggle to modelfurther growth without impacting leverage metrics.Comparing Landsec and British Land's earnings growth strategies, we seesimilarities...At its CMD earlier in the year, Landsec announced , that it will be focused on EPS and cashflowgrowth moving forwards (see A focus on income and income growth. Its strategy consists ofdisposals of low-income-producing development sites, retail/leisure parks andofficeassets,and reinvesting in retail capex, acquisitions, and residential development. British Land have a 5-lever strategy focussing on LFL rental growth, developments, cost control, capital recycling andfee income. Ultimately, we see many similarities between the strategies and broadly similargrowth profiles. We forecast increased earnings of c. £69m for Landsec, 18% of FY25E recurringearnings, and for British land we forecast c.£47m in earnings growth, or 17% of FY25E recurringearnings. Below we breakdown where we think the key drivers of earnings growth and the keyrisks for the companies lie.1. LFL rental growth and reversionGiven the fact Land and BL are exposed to broadly similar asset classes (mainlyofficeandretail), it is not surprising that we forecast broadly similar LFL rental growth and reversion.British expect to deliver 3-5% LFL growth in FY26 (we assume the same for FY27), and Landsecguides for low to mid single digit LFL net rental income growth. All told, for Landsec we forecasta total gross rent increase from reversion over our forecast period of £105m, and for BritishLand £45m, with the greater sum at Land owing to its larger reversionary potential.Our conclusion: Better at Landsecbecause it has a greater current reversion potential for in-place rent.2. Cost controlAt its CMD, Landsec guided to a £12m reduction in overhead costs over the next 1-3 years. Partof the reason that Landsec are able to drive earnings growth through cost reduction is due to itshigher cost ratio. We calculate Landsec's FY25E cost ratio to be 27.4% vs. British Land at 21.7%.We commend British Land's strong focus on costs, particularly on admin expenses, which weredown YoY and are expected to be down further over FY26E, but it does mean that the companyhave to look elsewhere for earnings growth, in our view.Our conclusion: Better at Landsecbecause British Land's business is more costly.3. Capital rotationLandsec's strategy comes with capital rotation on a greater scale, which we do see as a risk. Thegroup plans to rotate c. £3bn of ca