LAND SECURITIES is expected to lay bare the full extent of the commercial-property bloodbath this week when it puts plans for a demerger on ice and unveils a shock 20% drop in the net value of its assets.

A virtual shutdown in commercial-property lending has combined with falling occupier demand and a steep decline in rents to push values down sharply since the collapse of Lehman Brothers in September. Analysts were this weekend slashing forecasts for Land Securities’ half-year results to show a fall of more than 20% in its net asset value per share from £19.56 to between £15 and £16.

They expect the group’s £13.6 billion portfolio of shops and offices to have plunged in value by between £1.5 billion and £1.7 billion to about £12 billion.

Nomura analyst Mike Prew said: “The eye of the debt storm and tenant recession is now passing through real-estate markets.”

The sharp fall in commercial-property values has triggered concern that even Britain’s biggest listed real-estate companies could breach their banking covenants.

Analysts say, however, that Land Securities should be in a strong position to reassure investors this week over its debts because its loan facilities are more flexible than many of its rivals and it has plenty of headroom.

If values continue to fall sharply, its operating flexibility will be constrained and it may need to hold more cash or blue-chip assets, but it will not be forced into a costly renegotiation of its debts.

The FTSE 100 group had planned a three-way break-up involving the sale of its Trillium outsourcing division and the demerger of its shopping and central London divisions into two FTSE 100 companies.

The group has already said the global financial turmoil has derailed the timetable for its plans, but City sources suggest the company has now curtailed all spending relating to the demerger and stopped all work on the plans for the foreseeable future. It is thought it will still press ahead with a sale of Trillium.

A new chairman of the combined group could be appointed as early as this week following the departure of Paul Myners to the Treasury.

Analysts expect Land Securities to pick the preferred candidate from its own nonexecutive directors. It is thought that Alison Carnwath, Sir Christopher Bland, the former BT chairman, and Rick Haythornthwaite, are the top contenders.

With the demerger off, speculation will intensify that Mike Hussey, head of the London division, will be installed as chief executive of rival British Land. Hussey will face competition from Toby Courtauld, chief executive of Great Portland, and internal candidates. Royal Bank of Scotland, Barclays and HSBC stepped up talks with Metrovacesa, Spain’s largest property firm, about refinancing its €7 billion (£5.7 billion) of debt after the developer’s controlling Sanahuja family offered more than 50% of the company to six Spanish banks in exchange for forgiving the debt they took on to buy it last year.

HSBC, which lent the family €582m, has not decided whether to join the debt-for-equity swap. Talks are running parallel to HSBC negotiations over an £810m loan made to Metrovacesa to buy the HSBC tower in Canary Wharf.

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