By Tiisetso Motsoeneng

UK-based shopping malls owner Liberty International has written off £10.2 million in the nine months to September, more than double the £4.5 million booked last year as the stagnant British economy force retailers to prematurely vacate its centres, it said today.

This year alone 31 tenants renting 78 units in its shopping centres vacated the premises, contributing £3.7 million to non-recoverable expenses, but 44 of these units have been re-let or under offer, the real estate investment trust said.

"The third quarter of 2008 and the period since the end of September will long be remembered for the extreme turbulence in financial markets, which has had a marked impact on the UK commercial property sector," said chairman Patrick Burgess.

Burgess was commenting on Liberty International's nine months results to September, which showed that an decline in pre-tax profits and its property values.

Underlying pre-tax profit fell to £77.8 million, or 20.1 pence per share, from £96.7 million, or 26.7 pence, hit by particularly by once-off internal reorganisation expense of £8.8 million.

Net rental income increased to GBS281.3 million from GBS270.5 million, but value of its total properties fell to £7.878 billion from £9.018 billion, reflecting financial markets turbulence.

According to the Investment Property Databank the UK commercial property market has fallen by over 25% since its peak in June 2007.

But Burgess said after 15 months of falling market values, the group's assets were more defensively stated with limited transactional evidence available to its valuers.

He added that Liberty's assets have fallen by just 12.1% this year compared with the overall sector in that country.

"The scarcity value and strong competitive position of our UK regional shopping centres is unlikely to be substantially further challenged for a sustained period, given the sharp reduction we anticipate in the potential supply pipeline of UK shopping centre space," he said.

Source: I-Net Bridge