Great Portland Estates suffered a large drop in its net asset value in the fourth quarter of last year, as rental value falls started to bite.

The West End of London REIT today revealed a 20.5% decline to 392p a share in its NAV – the biggest quarterly fall in the downturn.

This drop was driven by a 12.4% fall in the value of the portfolio to £1.25bn.

‘As we warned at our half-year results in November, deepening problems in the credit markets and heightened fears of a prolonged recession have served to push up investment yields and dampen occupational demand for office and retail space in central London,’ said chief executive Toby Courtauld.

‘As a result, the rate of decline in property valuations accelerated across all UK sectors during the last quarter of 2008.

By sector, the portfolio value declines in the quarter were - West End offices 13.1%, City & Southwark offices 12.7% and West End retail 9.3%. These rates of

decline compare favourably to the capital reductions in the IPD monthly West End office, City office and London retail sub sectors of 16.1%, 16.9% and 12.4% respectively.

The value decline was driven more by rental value declines – 9.4% overall – and less by the 40 basis point rise in the initial yield to 5.4%.

Vacancies in the portfolio doubled to 7.5% during the quarter, due mainly to forward development planning rather than tenant failures.

‘Whilst we expect 2009 to be challenging, our priorities remain capital conservation and cash flow generation, maximising occupancy and crystallising reversions,’ said Courtauld.

‘With our comfortable debt ratios and financial flexibility, we are relatively well placed to take advantage of further investment market weakness as the year progresses.’