Talks that could have led to a takeover offer for Mapeley, the £450 million property company, have collapsed.

Fortress, the New-York based hedge fund that has a 50 per cent stake in Mapeley and which floated the company in 2005, proposed an offer, thought to be about £19 a share, last month. The collapse of the talks is thought to relate to the current problems in raising finance in America's money markets.

Mapeley's shares tumbled yesterday, from £15.57 to £13.21. Indeed, their value has more than halved over the past 12 months. Shares in Fortress Investment Group, the first US private equity group to go public, have also fallen, by about 70 per cent, since its flotation last year.

Mapeley, the landlord to HM Revenue & Customs, owns a property portfolio worth £2.1 billion, including the branch network of Abbey, the banking group. It 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.

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In the final three months of 2007, Mapeley suffered a 4.3 per cent decline in the value of its property holdings. Worst-affected were the company's 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 and a value slightly less than £1 billion.

Fears are growing that values of commercial property in Britain 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, which 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.

Fortress has about $38 billion in assets under management, with affiliates from San Francisco and Los Angeles on America's West Coast to Frankfurt, Rome, Hong Kong and Tokyo.

Property players

— Jamie Hopkins is the chief executive of Mapeley. A chartered surveyor and former director of Savills, he has been involved in the company since its formation

— Mapeley's main backers are: Fortress Investment (50.2 per cent), Goldman Sachs (8.43 per cent) and AXA (4.85per cent)

— Fortress Investment's chairman and chief executive is Wesley Edens, who co-founded it in 1998

— Fortress is an alternative asset manager, meaning that it raises, invests and manages private equity funds and hedge funds. It has about $37.8 billion (£19 billion) in assets under management

— The cost of other failed property deals includes the £391 million hit taken in January by Mitchells & Butlers from hedging an aborted £3.5 billion venture with Robert Tchenguiz. In August 2007 Royal Bank of Scotland pulled a sale of £1.1 billion of hotel assets, including the Waldorf Hilton, in London, to Robson Asset Management

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