UK - Land Securities announced yesterday in its half-yearly annual results that "adverse market conditions" have forced the firm to abandon its demerger plans in order to protect shareholders' interests.
The UK's largest listed property company, with a commercial property portfolio worth approximately £12bn (€14.2bn), has stopped year-long plans to split its London property, retail and real estate outsourcing branches into separate businesses, as it reported a 20.7% drop in its net asset value in the six months to September 30, 2008.
Francis Salway, chief executive for Land Securities, said: "Our board's position is that we still believe in the benefits of specialisation, but we don't believe that it would be in our shareholders' interest to implement (the) demerger. So work has stopped."
Land Securities did not give any indication as to when plans for a demerger would resume, but did not predict any immediate change in market conditions.
"Our objective is to navigate a prudent line through the current volatilities and we continue to manage the business with a cautious outlook," said Salway.
The firm's interim report revealed a pre-tax loss of £1.74bn, resulting from a £1.72bn decline in the value of properties, but showed good overall performance, with a 13.3% growth in revenue profit.
Commenting on the results, Salway said: "Our results reflect that we are going through an unprecedented period of financial instability which has severely impacted investor confidence, the availability of credit and the pricing of property investments.
"Although we are by no means immune to the prevailing market conditions, the fundamentals of our business continue to be sound as a result of the resilience of our income streams."
Land Securities maintained it was still evaluating the sale process of Trillium, its property outsourcing arm that manages over 2000 properties in the UK.
The firm also announced yesterday the appointment of Alison Carnwath as new chairman for Land Securities, following the resignation of Paul Myners in October to become a government minister.
"Land Securities has a talented management team who are working hard to address the effects on our business of these unprecedented challenges in the market. I look forward to leading the board through these turbulent times and shaping the business for the future," said Carnwath.
Carnwath, 55, previously chairman of M F Global and a non-executive director of Land Securities since 2004, will assume her position with immediate effect.