Profits at business space provider Workspace dropped from £19.9m in the first half of 2007 to a loss of £128.5m in the first six months of this year.
The company which provides premises to 4,500 small and medium enterprises said the underlying business was trading well, with occupancy and enquiry levels maintained.
It receives 800 enquiries per month. In the last six months it secured over 500 lettings for new customers. Workspace says customers from higher priced accommodation in London are moving to its cheaper units.
Revenues grew 8.0% with some increase in empty space resulting in £0.7m in additional charges.
The company was hit by falling commercial property values. Its portfolio fell 12.3% to £870.9m over the half year.
Harry Platt, Chief Executive, said: "The reduction in the property valuation reflects the wider investment market, set against a backdrop of very few property transactions and the lack of liquidity in the market place."
He added: "As interest rates fall, our London based portfolio should become increasingly attractive. We do generate a solid income from a diverse customer base in affordable space with low capital values and good long-term growth prospects, driven by continuing demand from SMEs in London."
The company has cut costs and capital expenditure by half to improve its cash position. In the current economic environment, expenditure has been reduced to all but essential projects and debt reduction.
Workspace aims to cut £1 million from overheads in 2009/2010. It also expects to receive up to £17m from current redevelopment projects next year.
To reserve cash, the company did not raise its dividend, maintaining it at 1.52 pence per share.
At 9am, Workspace’s share price was down 0.75 to 98.50 pence.