Capital & Regional has moved to halt an alarming slump in its share price. At one point the shares lost 15 per cent of their value on rumours that the company's Mall fund was in breach of its loan-to-value covenants. But the share price rallied slightly after their firm denial and amid rumours of asset disposals.

In a stock exchange statement the company pointed out that its £1.4bn of Mall bonds do not have a formal loan-to-value clause, although a £300m facility with Royal Bank of Scotland did have a limit of 60 per cent.

And the partnership deed between C&R and the investors in The Mall Fund also capped gearing to 60 per cent of the portfolio value. As at the end of March 2008 the fund's debt stood at 58.8 per cent of value.

The statement concluded: "The Mall has a number of options including, but not limited to, realisation of assets which will ensure that The Mall remains within the agreed covenants. The company and Morley Fund Management, the fund manager of The Mall, are working closely together to this end."

It is rumoured The Mall is on the verge of selling its properties in Epsom, Edgware and Chester to Bride Hall and its US-based investor partner Carlyle Group for £307m.

Other major landlords are also feeling the effects of the slump in shopping centre values, with CSC's parent company Liberty International having to book a £345m write down on its retail portfolio during the first three months of 2008, the equivalent of 4.5 per cent of its value. And the company warned that the downturn was by no means over. "Further upward movement in valuation yields may well be experienced in 2008 as investment property markets remain unsettled in the light of ongoing uncertainty in financial markets and the general tightening of credit conditions," it warned shareholders.

"It is currently too early to assess the full impact of these factors on the general performance of the UK economy and specifically for the property industry. In particular, rental levels are likely in the next few years to become an increasingly important factor in valuation performance."

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