Land Securities loses £4.8bn after crash in property values

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The firm, the biggest landlord and developer in the UK and owner of Piccadilly Circus Lights in central London, said losses hit £4.77 billion in the 12 months to 31 March. It was far worse than the £988 million deficit racked up the previous year and came after its properties shed £4.74 billion or 34% of their value.

The slump in just one year more than eclipsed the 27% fall in values over three years in the property slump of the 1990s and left its portfolio of shops and offices worth £9.4 billion.

Chief executive Francis Salway said: "This year the UK commercial property sector saw the sharpest fall in capital values on record as the full severity of the economic downturn hit the sector. Our portfolio was not immune to the market correction.

"We expect conditions to remain challenging in a weak economic environment, with vacancy rates rising and rental values weakening, putting pressure on rental income."

The losses resulted in a 66% plunge in net asset value per share to 593p and shares fell 27p to 512p, having peaked at 2112p at the height of the property boom in 2007.

Land Securities suffered more than many in the industry because of its exposure to offices in the City of London, retail warehouses, and shopping centres.

The firm sold £1.1 billion of property last year and recently completed a £756 million rights issue to protect it from the downturn. It also pulled the plug on a planned demerger and instead offloaded its property services arm Trillium for £444 million. Debt was cut by £1.46 billion to £3.92 billion.

"We moved quickly to take the necessary actions to strengthen our balance sheet and create resilience in a difficult and deteriorating market," said Salway.

Rental income in London rose by 3% or £10.3 million driven by a strong performance from its retail portfolio in the West End which benefited from European and American visitors taking advantage of the weak pound.

It last completed two London office developments in Paddington and the City but has put the construction of the Walkie Talkie on 20 Fenchurch Street on hold due to tumbling demand for space.