Investors in a property fund run by Capital & Regional have seen stakes’ values fall 24 per cent since January.

The company announced on Friday that units in its £1.3bn Junction Fund, which buys retail parks, had dropped from 284p to 217p.

The fall came as the result of a 13.6 per cent devaluation in the underlying assets, magnified by gearing.

The news came against a darkening backdrop for the industry where shares have slumped, values are falling and many funds have taken radical action to stop investors fleeing.

Capital & Regional’s largest vehicle, the £3bn Mall Fund, saw a 17 per cent drop in value over the year due to a 7.9 per cent fall in its assets.

November saw the biggest toll, accounting for a drop of more than 10 per cent in both funds in one month.

A third fund, X-Leisure, is still up slightly on the year.

Shares in Capital & Regional, which peaked above £17 in February, closed down 12p at 476p last night.

All that follows a shock 8.2 per cent cut on Monday in the value of New Star’s £1.7bn property fund which is now down 17.8 per cent since July.

Average commercial property prices fell 4 per cent in November, according to figures released on Friday by the authoritative Investment Property Databank.

Valuers have cut their clients’ portfolios much more swiftly and sharply than many experts had predicted.

This is in contrast to the mid-1990s when the industry suffered a long-drawn period of price declines. Property shares have fallen consistently since January 1 as investors correctly predicted the downturn in the market – which has been hastened by the credit squeeze.

Anthony Bolton of Fidelity, the fund management group, has suggested that there is now value to be found in the sector where groups trade at big discounts to net asset value.

But many companies are still being heavily shorted by hedge funds and other investors. Data Explorers is an information company which tracks what proportion of a company’s shares are on loan.

It says four property companies are being shorted more than Northern Rock, the beleaguered bank, which on Friday had 8.1 per cent of stock on loan.

They are Grainger Trust, 10.83 per cent; Liberty International, 9.16 per cent: Great Portland Estates, 8.98 per cent: and Unite Group, 8.12 per cent. The coupon on real estate convertible bonds rose sharply on Thursday afternoon in another sign of nerves in the sector.

Confidence has been knocked after Australia’s Centro Properties Groupasked for trading in its shares to be halted on Thursday.

The group is expected to revise earnings guidance on Monday after admitting that it faces higher interest margins on loans.

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