Liberty International Reports Stability in Commercial Property Sector

Last week Liberty International – UK’s largest mall owner – reported a 40% decline in interim net asset value per share; however, the company claimed it hopes that the British commercial property market have lived through its worst times. Mr. David Fischel, Liberty International chief executive, said that finally the company is pleased to announce to its shareholders that the British commercial property market sees signs of stability, if not yet recovery. Even though Liberty International, which is the owner of the Covent Garden market, is positive of the future of UK commercial property market, the value of its investment portfolio decreased by 12.4% in the past 6 months and now amounts to £6.1 billion. On the other hand, this figure is yet not as bad as the fall of 14% suffered by Investment Property Databank. Mr. Fischel claimed that his company faced less tenant failures in the 2nd quarter of 2009, which, however, came along with a reduced number of tenant units and rental yields, which constituted 33 and £4.8 million accordingly and compared to 92 and £14.5 million in the 1st quarter of this year. Also, the occupancy rate reported by Liberty International fell from 98.7% in the end of 2008 to 98.3% this summer. Mr. Fischel believes that further collapses will definitely take place. It should be noted that according to Mr. Fischel, company’s asset sales have been largely complete, which means that the company is now in a strong financial position. However, he does acknowledge that the full economic recovery in Great Britain will take a long time. Let us remind that earlier on Monday Standard & Poor's (S&P), a British rating agency, warned against limited creditworthiness of country’s property firms. Its warning was, however, contested by Workspace, a small business landlord, which currently enjoys rising occupancy levels.