Land Securities is to sell its Trillium outsourcing arm to Telereal for £750m.
Trillium chief executive Ian Ellis will step down from the LandSecs board on completion of the deal.
The transaction, which analysts had hoped would be around £1bn, will generate a loss of around £340m.
However, it will give Land Securities £444m of cash to reduce its debt, with an additional £25m in cash to be deferred by up to two years.
As part of the transaction, Land Securities will loan £50m (on market terms) to the Trillium Investment Partners Fund.
Chief executive chief executive Francis Salway said: ‘We are pleased to have concluded this sale in a challenging economic environment. We will now focus on our core property investment and development activities.
‘We continue to run the group with a cautious outlook and a focus on balance sheet management.’
Graham Edwards, CEO of Telereal, said: ‘Bringing together Telereal and Trillium will benefit our customers, our staff and our shareholders. Trillium and Telereal are a great fit – we are two of the leading players in the real estate sector whose businesses are highly complementary.’
JP Morgan analyst Harm Meijer said: ‘We like the disposal as it increases the company’s investment focus and lowers to loan-to-value ratio, but we had hoped for a better price.’