Rugby Estates Investment Trust has scrapped its dividend following a 35% fall in its net asset value a share last year.

The REIT’s net asset value a share fell from 98p in 2007 to 64p in 2008 as the value of its property portfolio tumbled 26% to £60m.

As a result, it suffered a £20.1m loss after tax compared with a £5m profit in 2007 which led to a £15.4m deficit in its distributable reserves.

It said this meant it would be unable to pay out a dividend to shareholders until the deficit had been returned – at which point REIT legislation would force it to pay ‘at least 90% of profits of the group’s tax-exempt property rental business’.

The company’s revenue increased slightly from £1.1m to £1.2m due to a 0.4% increase in rental values last year.

However, its voids reached 12% as a result of lease expiries in the second half of last year – 60% of which it said was under offer.

Philip Kendall, chairman of Rugby, said: ‘The group is generating a positive revenue profit and cash flow. Once property valuations have stabilised and the need to conserve cash resources against possible liquidity risk contingencies has reduced, the board will consider what avenues might be open to address the deficit on distributable reserves so that the company can commence paying distributions to shareholders.’