British Land has sold its One Exchange Square in the city’s Broadgate Estate for £406.3m on the same day it announced its results and warned of a slowdown in the property market.

German open-ended fund manager KanAm has agreed to buy the 12-storey office and retail scheme from the UK’s second-largest REIT. The 384,362 sq ft building is the headquarters of the European Bank for Reconstruction and Development. The bank has around 15 years left on its lease.

The deal will complete in June and is part of British Land’s ‘strategy of recycling capital into further development at Broadgate’.

It has also announced that it will press ahead with the construction of its £234m 47-storey Leadenhall Building. Demolition of the site has begun and it is due to complete in 2011. It is part of the company’s £4bn development programme, which includes the new 35-storey Broadgate Tower and 201 Bishopsgate developments in the city.

In its results it reported a 4.5% rise in net asset value a share for the fourth quarter driven by strong rental growth. Its net asset value per share rose to 1682p at the end of the fourth quarter, from 1610p at the end of the third quarter.

It had a 6.9% rise in rental growth for the year and capital returns of 10.9% outperforming the Investment Property Databank’s Benchmark of 4.3% and 10.7%.Its portfolio valuation increased by 9.7% for the year.

Stephen Hester, chief executive at British Land, said the coming year would be an ‘active year’ as it repositioned its portfolio following the change to REIT status but warned: ‘The investment market is likely to be more challenging than last year, underlining the importance of value creation from rental growth.’

DTZ acted for British Land. Jones Lang LaSalle acted for KanAm.