St Modwen Properties said that it is to cut costs and maintain cash to make sure it continues to operate within its covenants.

The company said in an interim management statement this morning that over the last three months, values had continued to fall and occupational demand was weakening.

St Modwen said: ‘We are therefore expecting that the further rise in yields predicted in our interim result announcement will be greater than anticipated and that this will not be able to be matched by our added value initiatives.

‘The residential land market remains virtually non existent.

'We do not expect this market to recover for some time, and are planning our business accordingly.

‘Cash management and cost control are the priorities at this time, and the necessary decisions are being taken to maintain the long term potential of the business and to ensure that we continue to operate within our banking covenants. Importantly, at the pre-tax level, excluding revaluations, we continue to operate profitably and to transact business.‘

St Modwen also said that it was being conservative in terms of new acquisitions for its ‘hopper’ (pipeline) of development sites, and was instead seeking to find opportunities where it could apply its development skills rather than spending cash.