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LONDON-Land Securities saw a huge devaluation of its portfolio during the first quarter. The overall value dropped $7.2 billion, a 34% decrease from the value a year before. The largest REIT in England saw a pre-tax loss of $1.5 billion from in 2008.

“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,” says CEO Francis Salway in the earnings report. “Our portfolio was not immune to the market correction and we moved quickly to take the necessary actions to strengthen our balance sheet and create resilience in a difficult and deteriorating environment.”

Part of the devaluation is due to $1.7 billion in dispositions. Land Securities completed more than 1.2 million square feet of new projects, which is only 72% occupied. The company also reduced its debt by 27.1% to nearly $6 billion.

“While the market may see some pockets of stabilization for certain asset types, we expect conditions to remain challenging in a weak economic environment, with vacancy rates rising and rental values weakening, putting pressure on rental income,” Salway says. “For all these reasons we continue to be patient and focus on those matters within our control such as balance sheet strength and maximizing income.”

For the London portfolio, Land Securities saw a 3% rental growth although property sales are approximately 16.6% below their March 2008 values.

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