In response to the credit crunch and failing investor confidence Britain's second-largest property developer revalued its £18.4bn portfolio and cut £1.4bn from the value of its office stock and retail parks yesterday. A drop of 8.9%.
This comes as banks and other financial institutions are assessing the impact of the deteriorating economy and whether they need less office space.
The credit crunch has made it harder for property groups to borrow funds for construction and investors have reacted by withdrawing millions of pounds from commercial property funds.
Insurance firm Axa recently stopped all withdrawals from its life and pensions property fund. Similar moves by Friends Provident, Scottish Equitable and Scottish Widows have locked in thousands of investors for six months or more.
Stephen Hester, chief executive of British Land, said that in the short term confidence remained low. "People are asking 'will financial institutions fire people in large numbers?' They haven't yet, but until the world economy plays out a little longer we won't know for certain. If they do let lots of people go then they won't need as much office space," he said.
He said the firm could boast 99% occupancy rates and had pushed up rents by 5% in the past nine months compared with a national benchmark of 3.4%. "Our net asset value is down 16%, but our underlying earnings per share are up by more than 16%," he said.
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