Land Securities is mothballing its planned three-way demerger because of the "unprecedented period of financial instability" which has seen the company's net asset value down nearly a fifth in six months.
A £1.72bn downward revaluation of the group's properties over the six months to 30 September has pushed the asset value down by 19.7 per cent and left the company with a £1.74bn loss for the period, compared with a £365m profit last year.
Francis Salway, the Land Securities chief executive, said that the bad figures are just a paper loss. "Our results reflect the fact that we are going through an unprecedented period of financial instability which has severely impacted investor confidence, the availability of credit and the pricing of property investments," Mr Salway said.
"Although we are by no means immune to the prevailing market conditions, the fundamentals of our business continue to be sound as a result of the resilience of our income streams."
The company's profits from rental income were up by 13.3 per cent to £196m compared with 2007, resulting in a second-quarter dividend of 33p matching that of the first. Some 1.1 million square feet of development space were completed in the period, of which 92 per cent were let, the company said.
But the plan, laid out in 2007, to boost the company's lagging share price by splitting Land into three separate businesses – London offices, retail and Trillium outsourcing – has been shelved.
Aaron Guy, an analyst at Collins Stewart, said: "Land always said they would only split the company if conditions were right and they have clearly deteriorated since that time, so stopping the process is the right thing to do and they will probably revisit the scheme in a couple of years' time."
The group's shares remained broadly flat at 1,014p yesterday, having closed down by nearly 5 per cent the day before in anticipation of bad news.