Stanhope battles on as losses fall

Stanhope, the struggling property group, cut its losses at the half- way stage but said conditions were tough. The dire state of the City's property market was underlined yesterday with a pounds 70.5m acquisition by George Soros's Quantum Fund of offices at 122 Leadenhall Street, London - pounds 1m less than the selling price 10 years ago.

In the six months to 31 December Stanhope's pre-tax losses fell from pounds 15.4m to pounds 9.3m. This was on turnover down from pounds 27.5m to pounds 17.1m because of the loss of rental income following the sale of buildings at Grays Inn Road and in west London.

Stanhope's head office costs were reduced from pounds 2.9m to pounds 2.1m, and the company has sub-let half its office at Lansdowne House in London, which Stuart Lipton, chief executive, said would save pounds 500,000. Stanhope's Broadgate Properties division made operating profits of pounds 600,000, compared with pounds 4.9m.

The company, whose borrowings at 31 March were pounds 135m, is negotiating a re-financing and Mr Lipton said steady progress was being made. The talks had been slightly delayed by legal action over British Land's purchase of 29.9 per cent in Stanhope from the Bank of Nova Scotia.

Mr Lipton insists that he and his family have pre-emption rights to purchase the shares. A hearing is likely during the summer, but he said the refinancing could go ahead without the result.

British Land is thought to be eager to get its hands on Stanhope's Broadgate Properties, which has prestigious buildings around London's Liverpool Street station. Mr Lipton and his family own about 35 per cent of Stanhope and would not want a rescue package for Broadgate that excluded Stanhope.

Tenants at the Leadenhall Street offices include Barclays Bank, UBS and Banque Indosuez. The site was last sold 10 years ago, by P&O, for pounds 71m. Quantum Fund, jointly run by British Land, has about pounds 1bn to invest in properties and has so far spent about pounds 500m.