Landsec and British Land Co. Plc, the two largest real estate companies by market capitalization listed on the London Stock Exchange, are carrying out fire-safety reviews on their properties following the blaze at London's Grenfell Tower in June that killed at least 80 people.
An investigation by S&P Global Market Intelligence that focused on the largest 25 LSE-listed real estate companies found that the two companies were among at least nine of the U.K.'s largest landlords that have taken action since the fire at the 24-story residential tower in West London.
In July, Unite Group Plc, the U.K.'s largest student accommodation provider by market cap and number of beds, failed fire safety tests on six of its properties following an investigation by the government. The exterior cladding on Grenfell Tower, made of combustible aluminum composite material, is believed by experts to have accelerated the spread of the fire around the building.
The failed cladding on Unite's properties will undergo a second phase of testing by the Building Research Establishment, which is being employed by the U.K.'s Department for Communities and Local Government to examine cladding from buildings across the country. Unite said during a July 26 first-half earnings call that it expects to lose between £500,000 and £1.5 million in potential earnings across 2017 and 2018 if the BRE recommends that all relevant cladding be replaced.
The fire at Grenfell Tower, in which at least 80 people
Landsec and British Land, whose portfolios comprise mostly office and retail assets, with minor exposure to residential, told S&P Global Market Intelligence that they had taken action following the Grenfell tragedy. "Landsec is carrying out a full audit of all our properties," the company said in an emailed statement.
British Land said in an email: "We have undertaken a review of all of our assets in light of recent events. All our initial investigations have proved satisfactory, but we are still completing the exercise. Our managing agents have been in contact with our residents to advise them of our actions and to reassure them as to the safety of our buildings. We can confirm that no composite cladding panels have been used on our residential or high-rise buildings, and no traces of polyethylene or other combustible materials are present in the building structures."
Hammerson Plc and Intu Properties Plc are also undertaking fire-safety reviews on their entire portfolios, the retail-focused real estate investment trusts confirmed. As "a precautionary measure," Intu is testing any external cladding used on its 14 shopping centers, said Gordon McKinnon, the REIT's group operations director.
Great Portland Estates Plc, a REIT holding office, residential and retail assets in London, confirmed in an emailed statement that it too was reviewing its portfolio.
Beyond Unite, Capital & Counties Properties Plc, Workspace Group Plc, Assura Plc and Safestore Holdings Plc all reported having completed fire-safety reviews on all or some of their properties since Grenfell, with each satisfied that their buildings are compliant with U.K. fire safety standards.
Workspace said that "while the vast majority of our buildings are brick-built, we've carried out inspections to all of our non-brick buildings and these buildings are safe." Assura looked at the cladding used on the four properties in its portfolio that rise over three stories and found them to be compliant in each case, it said in a statement. Cladding on Safestore's properties was also assessed, and the company received assurances from its supplier that it is "fit for purpose for industrial buildings," it said.
Meanwhile, five companies — Shaftesbury PLC, Tritax Big Box REIT Plc, Big Yellow Group Plc, LondonMetric Property Plc and Hansteen Holdings Plc — were satisfied that their properties met current U.K. fire safety standards and found no need for further review or inspection. Shaftesbury highlighted that its portfolio consisted of "smaller, low-rise, period buildings" and said it would continue to consider all risks across its properties in light of recent events.
Tritax Big Box said none of its properties have cladding considered to pose a fire risk, adding that it works closely with tenants to ensure the highest fire-safety standards in all buildings. LondonMetric noted that most of its assets were single-story properties below 18 meters in height. "Where buildings are outside of these parameters, we are satisfied that [aluminum composite material] panels are not present, including our interest in our small residential holding," the company said.
SEGRO Plc, Derwent London Plc, UK Commercial Property Trust Ltd., F&C Commercial Property Trust Ltd., Grainger Plc, NewRiver REIT and Daejan Holdings Plc were unable to provide any information on fire-safety measures when requested. The companies that make up the remainder of the top 25 listed real estate companies on the LSE — PJSC LSR Group, Savills Plc and Etalon Group Ltd. — do not own or operate property in the U.K.