Mapeley, the landlord to HM Revenue & Customs, revealed today that takeover talks which could have led to an offer for the £450 million company had collapsed.

Fortress, the US hedge fund that has a 50 per cent of Mapeley's shares and that floated the company in 2005, proposed an offer, thought to be in the region of £19 a share, for the property group last month.

Mapeley shares plunged by more than 13 per cent in early trading today to £13.43.

The termination of talks between the companies is further evidence of investors' unwillingness to complete transactions, on the day it was revealed that Punch Taverns had pulled its offer for the rival pub operator Mitchells & Butlers.

In common with other commercial property companies, Mapeley has seen its value half since last year.

The shares reached a high of £40 in the past 12 months.

Mapeley, which owns a property portfolio worth £2.1 billion, including the branch network of the banking group Abbey, had to take a £148.6 million writedown on the value of its holdings this month, pushing it into a £129 million pre-tax loss.

In the final three months of 2007, Mapeley has seen 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 by 7.7 per cent between October and December, bringing the decline over the year to 11.6 per cent, or worth slightly less than £1 billion.

Fears are growing that values of UK commercial property could 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.

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