British Land revealed a 17% drop in net asset value this morning.

The UK's second biggest REIT said in its third quarter results that the value of its portfolio had dropped 9% to £12.1bn between the end of September and December, with its average yield moving up 53 basis points to 5.4%.

Shares in British Land rose 2% to 980p in early trading.

'The worst behind us'
Chris Gibson-Smith, British Land chairman, said: 'Macro-economic uncertainty and the global credit crunch have depressed property values. However, the worst should now be behind us, though uncertainties remain on timing and extent of the correction.'

Chief executive Stephen Hester said that the property industry had done well in facing up to the need to correct values, but that economic uncertainty was still a worry.

Significant uncertainties remain
'There are important signs of markets adjusting to new realities and affected parties taking the resultant pain, although significant uncertainties remain,' he said. 'Property values have been hit largely in response to broader financial market declines though the extent to which economic slowdowns occur and impact future rental growth is still a question.'

Hester pointed to the company's rental value growth of 5% in the nine months since March, compared to the Investment Property Databank Benchmark of 3.4%, as a sign of the strength of the company's income stream.

Within the portfolio, the company's retail assets dropped in value by 9.5%, and its office assets fell by 8.3%. It took a further hit of 5.3% on the value of its Meadowhall shopping centre in Sheffield, the sale of a stake in which it pulled last year. It is now valued at £1.5bn, a 5.17% net equivalent yield.