British Land has seen the value of its property portfolio fall by more than a billion pounds in the last six months but has still managed to secure tenants for one of its high-profile City office blocks, despite the downturn.

The UK's second biggest property company said it was seeing a flight to quality amongst occupiers, which meant that its property portfolio was still 97 per cent let.

Chris Gibson-Smith, executive chairman of the group, said that a third of the group's Ropemaker Place offices was now under offer to a tenant, despite the difficulties being experienced by the financial services sector.

Mr Gibson-Smith, who is in charge of the company following the departure of Stephen Hester who left in October to become chief executive of Royal Bank of Scotland.

"Over the last four years we have repositioned the company to concentrate on prime property and that is paying off now," he said. "We are not immune to the problems but we are in a very strong positon. Our balance sheet is also as strong as it was a year ago, which is quite an achievement given what has happened in the economy and with the credit crunch."

Mr Gibson-Smith said he hoped to appoint a successor to Mr Hester by Christmas. "We have seen a wide range of candidates; we're pleased with the way it's going," he said.

"The opportunity to become chief executive of a FTSE 100 company is something people will do a lot for, so we're not short of interest."

British Land's pre-tax profits for the six months to the end of September were flat at £144 million but the value of its property portfolio fell 10.8 per cent to £11.6 billion, with its net asset value dropping 22 per cent to £10.43 per share, down from £13.44 in May. Shares in the company fell 9p to 534.5p in morning trading.

Analysts had expected a fall of as much as 25 per cent in net asset value, following the announcement last week that Land Securities, British Land's closest rival, had suffered a 20 per cent drop in its net asset value.

The financial turmoil has forced Land Securities to postpone its year-long plans for a demerger.

There were greater fears for British Land because it is heavily indebted and more exposed to out-of-town retail warehouse parks, which have been particularly vulnerable in the financial crisis.

In August, British Land was forced to delay construction until 2012 of the "cheesegrater" tower on Leadenhall, which promises to be a new landmark on the City of London skyline.

Mr Gibson-Smith said today that the resumption of work on the Leadenhall project depended on how deep the economic crisis would go and how long it would last.

He said British Land's balance sheet remains "as strong as it was pre-credit crunch", owing to a combination of efforts to reshape the company's portfolio, reduce debt and rebalance finances.

British Land said it had achieved more than 900,000 sq ft of lettings in the past six months.

It announced a 7 per cent increase in the dividend to 9.375p for the quarter to September 30, bringing the total for the half year to 18.75p.

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