Leading commercial property companies must actively strengthen their balance sheets and can no longer just sit out the slump in the real estate market, new research has warned.

UK real estate investment trusts (Reits) need to sell £16bn of assets, 27% of their properties, to reach safe loan-to-value ratios as the property downturn accelerates, Goldman Sachs said in a note yesterday.

The investment bank cut target prices for the sector by an average of 23% and downgraded British Land to a 'conviction sell', claiming that the UK’s second largest property company could have to sell up to 40% of its assets because it is too highly geared.

The UK’s leading REITs, including Land Securities, British Land, and Liberty, have been linked with potential rights issues as they strive to shore up their balance sheet and avoid breaching banking covenants.

Daily Telegraph