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LONDON, Oct 1 (Reuters) - British real estate developer St. Modwen Properties SMP.L said on Wednesday that efforts to preserve the value of its portfolio were being undermined by a rapidly deteriorating UK property market.
The company said the slide in UK property prices was continuing and occupational demand was weakening as Britain’s economic prospects soured, warning investors to brace for “disappointing” results until the market bottomed out.
St. Modwen shares, which have slumped more than 40 percent in the past year, fell 4.1 percent to 278 pence by 0801 GMT against a 1.1 percent rise in the FTSE 350 Real Estate Index .FTNMX8730.
“Since we reported our interim results in July, prices in the commercial property investment market have continued to decline, and we are now seeing signs that occupational demand is also weakening,” the company said in a statement.
“We are therefore expecting that the further rise in yields predicted in our interim result announcement will be greater than anticipated and that this will not be able to be matched by our added value initiatives.”
St. Modwen, which specialises in regeneration of town centres and underdeveloped areas across Britain, said it had modified its business in line with challenging market conditions and had taken steps to preserve cash and cut costs in a bid to remain within banking covenants.
St. Modwen exchanged and completed more than 20 transactions during the period, including a 119-bed Premier Inn hotel in Staffordshire, northern England and a 40,000 square foot bulky goods retail park in Runcorn, also in northern England.
It said it had struck 84 new lettings and lease renewals generating additional annual rent of 1.6 million pounds, which more than offset 66 vacations representing annual rent of 1.4 million pounds.
(Reporting by Sinead Cruise; additional reporting by Srikanth Srinivasa in Bangalore, editing by John Stonestreet)
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