Thursday Jun 11, 2026
Thursday Jun 11, 2026
Friday, 8 May 2026 04:34 - - {{hitsCtrl.values.hits}}
Lanka Realty Investments PLC (LRI) has delivered a transformational financial year ended 31 March 2026, supported by a materially enlarged asset base, stronger profitability, improved Net Asset Value (NAV) per share, and a lower loan-to-value (LTV) profile.
FY26 also included the strategic acquisition of Lee Hedges PLC, which expanded the Group’s recurring commercial property income base and resulted in a value accretive gain arising from acquisition of a subsidiary.
LRI’s revenue increased by 4.6% to Rs. 1.26 billion. Gross profit improved by 14% to Rs. 506.4 million, reflecting stronger operating efficiency and a more resilient income mix across commercial property, leisure, and property development activities. Operating profit shot up by 81.2% to Rs. 303.6 million in FY26.
Lanka Realty...
The Group recorded a gain arising from acquisition of a subsidiary of Rs. 357.7 million in relation to the Lee Hedges PLC acquisition. This gain supports the value accretive nature of the transaction and is consistent with the Group’s strategy of acquiring undervalued, asset-backed, listed property companies with long-term income and NAV growth potential.
Profit Before Tax (PBT) increased to Rs. 2.92 billion from Rs. 196.6 million in FY25, while Profit After Tax (PAT) increased to Rs. 2.08 billion from Rs. 147 million supported by the acquisition gain, improved operating performance, and fair value gains on investment properties. Earnings Per Share (EPS) improved to Rs. 4.90, compared with a loss per share of Rs. -0.45 in FY2025, representing a significant turnaround for shareholders.
For the quarter ended 31 March 2026, Group revenue increased to Rs. 434.9 million compared with Rs. 291.6 million in the corresponding quarter of the previous year. Operating profit increased to Rs. 207 million supported by the acquisition gain and stronger income contribution from the enlarged property portfolio.
Quarterly PBT was Rs. 3 billion and PAT was Rs. 2.16 billion. The quarter included the recognition of fair value gains and the gain arising from acquisition of a subsidiary, which materially strengthened reported earnings and EPS for the period.
The Group’s total assets increased to Rs. 29.7 billion as at 31 March 2026, compared with Rs. 19.18 billion a year ago, mainly due to the enlarged investment property base, consolidation of Lee Hedges PLC, and fair value uplift of properties. Investment properties increased to Rs. 22.45 billion, strengthening LRI’s position as a sizeable asset-backed property investment platform.
Total equity increased to Rs. 19.06 billion, compared with Rs. 9.92 billion in FY2025, while NAV per share improved to Rs. 51.40 from Rs. 38.52. The Group’s LTV ratio improved substantially from 23.7% in FY25 to 12.5% in FY26, reflecting a stronger capital structure, lower financial risk, and improved balance sheet flexibility.
On 8 January, LRI acquired a 51% controlling interest in Lee Hedges PLC through the purchase of 13,057,595 ordinary shares at Rs. 216 per share for a total consideration of approximately Rs. 2.82 billion. In addition, Eighth Wonder, the single largest shareholder of LRI, acquired a further 20.10% at the same price, resulting in an effective controlling interest of 71.10%.
The acquisition adds prime Colombo commercial property exposure, strengthens the Group’s recurring rental income base, and expands the scale of the investment property portfolio. The transaction is aligned with LRI’s long-term strategy of consolidating high-quality real estate assets under a listed, professionally-managed investment platform.
Subsequent to the reporting date, Lee Hedges PLC, a subsidiary of LRI, obtained unanimous shareholder approval at an Extraordinary General Meeting held on 28 April to purchase 57,204,262 ordinary shares held by the company in Lanka Realty Developments Ltd., representing 51% of the issued ordinary shares of Lanka Realty Developments Ltd., for Rs. 1.6 billion.
The transaction represents an intragroup restructuring of the Group’s property holding structure. As the approval was obtained after the reporting date, the transaction has been considered a non-adjusting event after the reporting period in accordance with Sri Lanka Accounting Standard (LKAS) 10, and no adjustment has been made to the financial statements for the period ended 31 March 2026.
Based on the proposed disposal of LRI’s 51% shareholding in Lanka Realty Developments Ltd., to Lee Hedges PLC, LRI is expected to recognise a disposal profit of approximately Rs. 709.98 million. This is expected to improve earnings by approximately Rs. 3.36 per share, strengthening reported profitability and supporting shareholder value accretion.
LRI said Sri Lanka’s property sector is positioned for gradual recovery, supported by improving macroeconomic stability, easing interest rates, stronger investor confidence, and renewed demand for well-located commercial and urban real estate. Colombo remains the key commercial and retail hub of the country, and demand continues to concentrate around high-potential, infrastructure-connected locations where quality office, retail, and mixed-use properties are limited.
LRI’s Group property portfolio is strategically located across prime Colombo and high-demand urban corridors, providing strong exposure to areas with long-term rental growth potential, higher tenant retention, and future capital appreciation. The Group’s commercial office and retail assets recorded strong leasing momentum during the final quarter, with occupancy levels increasing to above 95% across the office and retail portfolio.
During the final quarter, the Group implemented rent and service charge increases across selected properties, supported by improved market conditions, high occupancy, and stronger tenant demand. The revenue benefit from these increases was only partially captured in FY26, as the increases commenced towards the latter part of the financial year. Accordingly, the full year impact is expected to be reflected more meaningfully in FY27 through higher recurring rental income, improved service charge recovery, and stronger operating cash flows.
On’ally Holdings PLC is also expected to contribute more meaningfully to Group performance in FY27 through the full-year income impact of the outdoor LED advertising operation, which commenced during the last quarter of FY26. This high-margin advertising income stream further enhances the income-generating capacity of the Group’s property platform and supports diversification of recurring revenue beyond traditional rental income.
The Group’s property-backed asset base, including income-generating commercial assets, strategic land bank, and value accretive listed property investments, provides a strong foundation for recurring earnings, capital appreciation, and future development-led value creation. Together with the expanded commercial property platform following the Lee Hedges acquisition, LRI is well positioned to benefit from the recovery in Colombo’s property market and increasing demand for prime real estate assets.
LRI said FY26 represents a landmark year. “The Group delivered strong profit growth, meaningful NAV accretion, lower LTV, an enlarged investment property portfolio, and a value accretive strategic acquisition. The Group enters FY27 with a stronger balance sheet, improved earnings visibility, and a clear platform for sustainable, long-term shareholder value creation,” the company added.
