Land Secs shares hit by Trillium sale U-turn

Shares in commercial developer Land Securities have fallen after it revealed that it has sold its property management arm Trillium to property investment company Telereal for a £350m loss.

The move represents a U-turn after Land Securities halted the planned demerger of Trillium in November because of the deepening market woes.

Shares fell 3.5% in early trading after Land Securities said it had disposed of Trillium for £750m. This compares to a book value for Trillium's assets of £1.3bn. In addition the sale price includes just £444m in cash, with the rest of the price accounted for by taking on Trillium's debts, and assets that have already been disposed of.

Land Securities chief executive Francis Salway originally announced the demerger of Trillium in November 2007. However, one year later, announcing a pre-tax loss of £1.73bn, he said that market conditions were too volatile to continue with the strategy.

The sale does not include Land Securities' portfolio of Accor Hotels.

Salway said he is pleased to have concluded the sale in the current “challenging economic environment”.

He said: “We will now focus on our core property investment and development activities. The cash proceeds will strengthen our balance sheet in the current market and subsequently put us in a stronger position as the cycle turns. We continue to run the group with a cautious outlook.”