Brixton turns to Dylan in search for some way out of property apocalypse

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The Independent Online

Brixton Estates was in lyrical mood yesterday as it revealed the credit crunch had forced it into a loss for the first half of the year and complained of "confusion" in the market... by quoting apocalyptic lyrics from Bob Dylan.

The group succeeded really in confusing the market as it quoted the entire first verse from Dylan's 1967 classic All Along the Watchtower in its interim statement. It said: "The apocalyptic opening lines seem to capture the beleaguered mindset of the UK commercial real estate market."

The London-based group revealed, without the help of any Sixties musicians, that it had slumped from a £192m pre-tax profit in the first half of 2007 to a loss of £236.7m, and suffered big falls in the valuation of its property.

The group's net asset value, a key indicator for real estate investment trusts, has spiralled downwards by almost 18 per cent to 448p per share. Following the announcement, the shares fell almost 10 per cent.

Brixton, run by Tim Wheeler, said: "As we anticipated, the commercial property market has become more challenging in response to the credit crunch and slowing economies. There is confusion – and an element of denial – over direct property pricing due to lack of transactions."

In a sign of the way the market has changed, rental income has climbed 13.5 per cent to £39.4m from £34.7m in the first half.

As part of the group's offbeat announcement, it illustrated the front cover of its half year report with a drawing of the four horsemen of the apocalypse. Underneath, the slogan read: "The market may be in apocalyptic mood but there is some way out of here."

To keep the Dylan theme going, after quoting "There must be some way out of here/said the joker to the thief/There's too much confusion/I can't get no relief", it talked of the "thieves" as funded or equity-based opportunist buyers and the "jokers" as the owners who will not sell. "There is no 'way out' of this impasse – yet," it added.

The group said that since it had released its interim management statement, "sentiment has worsened and there are more indicators of a downturn in activities ... With growth slowing, the interest rate/cost of money scenario unclear and inflationary concerns, it will be surprising if this does not translate into lower activity across UK businesses".

Brixton was formed in 1924, and became a public company just over a decade later. Since 1997 it has focused on the UK specifically, selling off operations in Australia, Belgium, Germany and the US. It became a real estate investment trust last year. The group, which managers 19 million square feet and specialises in industrial property, is especially strong in west London with warehouses in Heathrow and Park Royal.

It said yesterday it had sold £560m worth of secondary property in 2006 in anticipation of a downturn and added that its development programme completed in April this year. "At present, we have no new construction work taking place or anticipated in the immediate future," it added. This includes stopping work at a former Guinness Brewery.