Mapeley, the landlord to HM Revenue & Customs, became the latest casualty of the commercial property slowdown yesterday as it took a £148.6 million writedown on the value of its holdings.

Property revaluation losses pushed Mapeley into a £129 million annual pretax loss just as it gave warning that a month of takeover talks with Fortress, its majority shareholder, may collapse.

While Mapeley confirmed that takeover talks were continuing, the approach amounted to nothing more than a “nonbinding indication of interest . . . There can be no certainty that any offer will be made or as to its terms.”

Fortress, the American hedge fund that floated Mapeley in June 2005, is thought to have mooted a £19-a-share offer last month. A year ago Mapeley shares were trading at £40, giving it a market value of £1.2 billion.

Shares in Mapeley fell as much as 14 per cent in morning trading before ending down 146p, 8.2 per cent, at £16.20, leaving the company, which sits on £2.1 billion of commercial property including the Abbey branch network, with a value of £482 million.

Annual figures revealed that Mapeley’s borrowings grew to £1.5 billion at its December year-end, up from £1.28 billion at the end of 2006. The company refinanced £257 million of credit this month.

However, over the final three months of 2007, Mapeley has had to deal with a 4.3 per cent decline in the value of its property holdings.

Worst-affected were Mapeley’s basket of regional offices, let on long leases to local government and large company tenants. Their like-for-like values fell 7.7 per cent between October and December, bringing the decline over the year to 11.6 per cent or worth just under £1 billion. Fears are growing that values of UK commercial property could still fall by a further 10 per cent by the end of the summer.

An expected drop in tenant demand for new space will add to the pain of a credit crunch that has removed leveraged buyers from the investor market since last summer.

Mapeley’s portfolio is mostly let on long leases to government departments with index-linked rents. This helped Mapeley to increase its revenues by 8.4 per cent over the year to £417.4 million.

Jamie Hopkins, chief executive of Mapeley, said: “We expect the strong creditworthiness of our tenants to support our cashflows and expect our vacancy rates to remain stable.”

This failed to assuage investors in Mapeley as continued worries about the occupier market and concerns about the company’s debt mountain bore down on its share price.

Worries about occupational demand rippled out to Land Securities and British Land, Britain’s two largest property companies, which are heavily exposed to the offices market. Shares in Land Securities fell 69p to £14.34, while British Land shares shed 48p to 863½p.

Mapeley, which is structured as a tax-efficient Guernsey company, increased its dividend by 11.9 per cent to 188p per share, meaning the shares now yield over 11 per cent.

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