The FTSE 100 retail specialist, which owns some of the UK's largest and best-known shopping destinations including London's historic Covent Garden market, said its adjusted net asset value per share -- a key industry benchmark -- fell to 1,264 pence in the year to end-December.

This pared the company's total 12-month return, including dividends, to minus 2.2 percent but Chairman Sir Robert Finch said the "defensive merits" and "resilient income streams" of its 8.6 billion pounds property portfolio ensured the firm outperformed industry benchmarks.

Benchmark provider Investment Property Databank's monthly index capital returns for retail property were minus 11.8 percent in 2007, Liberty said.

"Prime UK shopping centres are the super-tanker of real estate -- they just plough through," Chief Executive David Fischel said in a conference call.

"They show low volatility, high income streams and are very stable assets... and quality counts in this environment," he said.

Some analysts say Liberty's virtually fully-let portfolio makes it the property company most likely to withstand a recession but KBC Peel Hunt's Keith Crawford said Liberty would have to pedal hard to mitigate further losses going forward.

"The revenue cash flows are the most reliable in the sector, but rental growth is hardly sufficient to propel the valuation line," he said.
Liberty shares were trading down 1.1 percent to 992 pence by 1116 GMT, in line with the FTSE 350 Real Estate Index.

RENTAL GROWTH

Double-digit rental growth and a 6 percent increase in underlying pretax profits to 129 million pounds helped to offset Liberty's capital growth performance.

Net rental income across the company portfolio grew by 10 percent to 374 million pounds over the period as occupancy levels at its centres hit a record level of 98.7 percent.

Fischel said Liberty was confident rents would continue to grow, and was undaunted by prospects of a dip in consumer spending power on the back of macro-economic uncertainty.

"We have 27 years of rental history at our Victoria Centre in Nottingham and in those years we can only detect one down year," said Fischel.

"The rent has grown from 2 million pounds to 20 million pounds over 26 years. We are a property company not a retailer -- our cashflows have always been correlated with rent reviews rather than short-term retail sales," he said.

Liberty said it continued to be a beneficiary of the global flight to quality assets as anxious investors continued to re-appraise portfolio risk in the wake of the U.S subprime crisis.

The company sold 340 million pounds of property assets over the period at a total surplus of 37 million pounds above December 2006 book values.

Fischel said Liberty was in "great financial shape" with more than 725 million pounds of cash and undrawn credit facilities and a 42 percent net debt to assets ratio, but he said the firm preferred to focus on managing existing assets rather than launch a massive investment spree.

"We don't need to make acquisitions to grow this business," he said. "We see substantial opportunities within our existing assets to continue our onward march," said Fischel.