Land Securities has postponed its year-long plans to split the group into three and could yet cancel the sale of Trillium, its outsourcing business.

Britain's second-biggest property company said a year ago that it would separate into standalone retail and London real estate businesses, while selling Trillium, which provides accommodation to government departments. The financial crisis has put paid to its demerger plans, but the company said that it would continue to work on a potential sale of Trillium, despite a “protracted” and uncertain timescale for any disposal.

Francis Salway, the chief executive of Land Securities, said that the board still believed in the benefits of specialisation but that work on demerger had stopped. He said: “If the cost of transitioning the debt are so great as to undermine any benefit, it is not worth continuing [with the demerger].”

The plans have been put off indefinitely. “We will not be constantly looking over our shoulder, assessing whether the debt markets have recovered,” he said.

Land Securities has suffered from a 20 per cent fall in the net asset value of its properties, the standard industry benchmark, in the six months to September 30. However, shares rose 1.1 per cent as investors were relieved that the fall in values was not worse.

Rental income streams generated by the company's assets rose by 13.3 per cent to £195.8 million. The strong performance paved the way for a 3.1 per cent rise in the interim dividend to 33p.

Land Securities said that it had completed 1.1 million sq ft of development over the half-year period, of which 92 per cent has been let — including a new shopping centre in Bristol, which received one million visitors in its first ten days of trading.

Vacancies in the property portfolio crept up to 4 per cent from 3.4 per cent in March, on a like-for-like basis. Land Securities said that it was fortunate that its biggest tenant was the Government, which occupies 9 per cent of its office property. Arcadia Group, its single biggest retail tenant, accounts for only 1.7 per cent of floorspace.

Mr Salway said that he expected a delayed impact from the Bank of England's cut in interest rates last week, which would have investors looking to property for better yields.

The company has had to write down values of its portfolio resulting in a £1.7 billion loss for the first half to September 30. This included a £148 million on the goodwill in the Trillium business, which was written down over fears that its new business prospects rely on the availability of cheap long-term debt.

Land Securities has reached a natural pause in its development programme and will keep a number of large office developments in Central London on hold, until the market recovers. It has cut its staff this year, but would not confirm numbers.

It will not take a final decision on deferring the Walkie Talkie tower in the City until next spring, when demolition on the site is complete, but Mr Salway said it was likely that the scheme would be delayed in expectation of a market recovery in 2011.

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