Land Securities has suffered from the grim retail climate as its exposure to retailers in administration in its portfolio soared by 65% in the fourth quarter of last year.

In its interim management statement this morning, it said that the number of retail tenants in administration was up from 2.9% of its retail rental income on 30 September to 4.8% on 31 December.

Overall voids for its retail portfolio rose from 4.4% to 4.7%.

The company has sold nearly £1bn of assets, putting off any need to raise new equity in the face of possible loan-to-value covenant breaches.

The biggest sale was outsourcing arm, Trillium, to Telereal for £750m on 12 January.

The £444m cash proceeds have been used to pay down debt and strengthen the balance sheet.

In addition Land Secs completed a further £213.8m of disposals in the fourth quarter at 7.3% below the September valuation.

As a result, it said that its loan to value (LTV) ratio was down from 53.4% on 30 September to 49.1% on 31 December, based on 30 September asset values and 31 December debt position adjusted for the Trillium sale.

The company’s loan-to-value covenant is 65%.

Chief Executive, Francis Salway, said:

'Commercial property has gone through an unprecedented period of re-adjustment.

Our objective continues to be to navigate a prudent line through the current volatilities by concentrating on the management of our balance sheet and the leasing up of our developments. We maintain a cautious outlook in the belief that property will continue to be affected by the weakness of the wider economy.'

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