Bullring sale reflects slump in commercial property

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The Independent Online

Land Securities is believed to have taken a £30m hit on its stake in the Bullring, the Birmingham shopping centre, confirming the continued decline in the value of commercial property.

Francis Salway, chief executive of FTSE 100 property giant Land Securities, put the stake on the market in March for £300m. The final deal has been viewed as a barometer of the state of the British commercial property market.

A source close to Land Securities said: "The quoting price was at 2007 values, and that has since slipped by 5 to 10 per cent. However, that's OK, given the decline in the property market."

It is hoped that a deal will be struck by next month. Land Securities has run the auction as an invited competition, but the source said the bidders could be "counted on one hand", describing them as "overseas money and a bit of old-school money".

The remaining stakes are owned by Hammerson and Henderson Global Investors; both have the option to buy out Land Securities and take a controlling interest in the Bullring.

Land Securities is also selling off Trillium, its outsourcing business, for which it hopes to get £1.4bn. Only one consortium, a group of Middle Eastern investors, is left in talks after a team led by the William Pears Group pulled out earlier this month.

The Bullring news emerges in another big week for the built environment sector. On Thursday, the FTSE 250 housebuilder Bellway will issue a trading statement. Kevin Cammack, a sector analyst at Kaupthing, expects it to announce the closure of at least one regional office. Earlier this year Bellway made 370 job cuts; the closure of another office is likely to see at least another 50 people lose their jobs.

Also on Thursday, British Land, which owns nearly £13.5bn of office and retail space, will announce first-quarter results.

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