British Land shares suffer as values cut

SHARES in British Land took a battering yesterday after the company wrote down &pound;3.2bn on the value of its property portfolio, reviving fears that banks will suffer huge losses from commercial mortgage lending.<br /><br />Announcing its annual results, the commercial property group said its net asset value tumbled 64 per cent to 398p a share, well below the average analyst forecast of 423.6p. The shares closed down 8 per cent at 380p.<br /><br />The company, which owns most of the City&rsquo;s Broadgate office complex, said that its portfolio is now valued at &pound;8.63bn, 28 per cent down on the valuation at end-March 2008. Excluding the revaluation losses, British Land reported underlying pre-tax profits of &pound;268m, broadly in line with last year.<br /><br />&ldquo;Against a backdrop of difficult market conditions, British Land&rsquo;s operational performance has shown resilience,&rdquo; said chairman Chris Gibson-Smith.<br /><br />&ldquo;We have the capacity and intention to take on the new challenges that will arise and seize opportunities where we see value,&rdquo; added chief executive Chris Grigg.<br /><br />But the figures will be uncomfortable reading for property lenders, who have been sitting on billions of euros worth of vulnerable commercial property mortgages since the property bull market expired in 2007.<br /><br />The banks are uncertain when values will bottom out or how long borrowers can maintain interest payments as tenant insolvencies rise.