As H1 results boost Land Securities’ share price, should I buy?

I Global Security Group (LSE: LAND) share price is down 34% over the past five years, while real estate investment trusts (REITs) are not doing well.

I have always seen bearish sentiment as lost. And first-half results on Friday (15 November) provided a slight improvement, with shares up 2% as I write.

That’s not a big leap. But this FTSE 100 member is the UK’s largest property investment company. And I see signs that it could be the start of something big.

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Getting better

Another important thing for me is to look better.

The company reported earnings per share (EPS) on an EPRA calculation basis of 186p. That’s down from 198p in the past.

But CEO Mark Allan spoke “performance beyond performance,” with “continued residential growth and positive rental growth across our retail portfolio in London, translating into rapid revenue growth.“

He added that “therefore we are raising our view on EPRA EPS and now expect FY25 to be in line with last year despite a net disposal of £0.5bn last year, and for this outperformance to carry over into FY26..”

Time to separate

The board increased the interim dividend, by 2.2% from 18.2p last year to 18.6p. That’s just a small increase. But for me it adds a vote of confidence to the current FY dividend yield forecast of 6.9%.

That 6.9% just happens to match the average annual return of the FTSE 100 over the past 20 years.

And it only comes from dividends, no other share price increases. I wonder if we might be looking at overall market-beating performance in the future here?

To add more details, the update mentioned “A 6% increase in repurchases/renewals across London and Major Retail, a 40bps increase in occupancy, 3.4% growth in like-for-like rental income, and property valuations returning to modest growth as rents rose 2.1% and the yield is stable..”

Caution is required

I must remember that this is still a sector that may be under pressure for a long time.

Interest rates remain high, and it looks increasingly like the pace of reduction will be slower than we first thought.

We recently heard that the UK economy barely grew between July and September. On the other hand, that would prompt a focus on lowering interest rates more quickly. But on the other hand, it’s not good news for a company that depends on real estate for its business.

REITs often carry a lot of debt as well, in the form of financing for their real estate investments. And Land Securities recently reported a total debt/EBITDA ratio of 7.4 times.

For most companies that would be alarmingly high. But in the case of property investment, it seems modest.

Bottom line

So, should I buy my Stocks and Shares ISA? Not now, mainly because I see my preferred candidates. That includes other REITs with different property models.

I still fear medium-term share price weakness as well, although Land Securities remains on my long-term watch list.