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7 August 2008

7.4% drop in value of Liberty’s commercial property assets

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by Lin Freestone

7.4% drop in value of Liberty's commercial property assets

Liberty International, a UK investor in shopping centres, has revealed a 7.4% fall in the value of its assets and an increase in bad debt provisions.

The company anticipates a continuing fall in values in the commercial property market in the face of weak consumer spending.

There was a first-half pre-tax loss of £458m, compared with a profit of £552m in the same period in 2007. Shares in the company, the UK’s third-largest Real Estate Investment Trust (Reit), have fallen by 70p to 900p. The company is maintaining its interim dividend at 16½p, payable on September 16.

The company, which has an £8.6bn property portfolio, has been affected by retailers going into administration and has increased its provision for bad debt to £4.5m.

The Reit has investment in shopping centres including Lakeside and Covent Garden, and has put on hold the redevelopment of its Westgate shopping centre in Oxford.

The chairman of Liberty, Patrick Burgess, predicts that the property cycle will have to run its course with the excesses of the boom years to be purged from the system. He warns that a property market revival could not begin before the banking sector recovered and predicts that property values are likely to fall still further.

Liberty’s occupancy levels remain high and footfall at its shopping centres has not fallen. There is also approximately £478m of cash and undrawn debt to invest.


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