By Sinead Cruise
LONDON, Nov 4 (Reuters) - It will take more than a clutch of interest rate cuts to convince investors in Britain's bombed-out property market that the biggest companies can lift the mood when reporting season resumes this week.
Few expect an end to the savage asset mark-downs, slim dividends and profit cuts seen in the past 18 months, as dark economic portents accelerate the repricing of UK real estate.
"UK capital values have already fallen 24 percent since the peak but I predict peak to trough markdowns in the high 30's for prime UK property and in the 40's for secondary assets", said Alex Ross, senior fund manager at Premier Asset Management.
Listed real estate companies were trading at even bigger discounts, Ross said, foreshadowing more losses to come.
"The major UK companies are now trading at 45-50 percent discounts to last reported net asset values. That implies further writedowns in capital values are yet to come," he said.
Britain's largest shopping mall owner Liberty International reveals third-quarter figures on Wednesday, one day before the Bank of England is expected to slash the UK base borrowing rate for the second consecutive month.
Both Liberty and retail rival Hammerson may be forced to concede softer letting terms -- or risk a glut of defaults next year, Nomura analyst Mike Prew said. In August, Liberty had already upped provisions for tenant failures.
"Retail foreclosures tend to happen in January and February depending on the ability of operators to destock after Christmas," Prew said.
"We think all the major mall operators are nursing some marginal tenants and we expect landlords will need to offer more support, especially when a 'negative wealth effect' linked to falling house prices takes hold," he added.
On Nov. 12, Land Securities, Britain's largest real estate investment trust (REIT), releases its half-year figures.
More than a year has passed since the firm announced plans for a three-way demerger and 1 billion pounds-plus ($1.62 billion) sale of its outsourcing arm Trillium and the market is hungry for news on progress.
But some said investors should not expect any great revelations on the timing of either event, as financial market volatility threatened prospects for both plans.
"They always said they would only split the firm if market conditions were right. Given the deterioration in the debt and equity markets, there may not be as much urgency behind a demerger of the Retail and London businesses," said Aaron Guy, analyst at Collins Stewart.
And British Land will face unusual scrutiny when it reports on Nov. 19 following the departure of CEO Stephen Hester to Royal Bank of Scotland.
Shareholders will look for reassurance that chairman Chris Gibson-Smith will be able to leave his current caretaker role sooner rather than later, Nomura's Prew said.
While the companies may provide little evidence of a slowdown in the direct property market correction, some analysts believe the listed sector is overshooting and is heralding a recovery in European property stocks.
According to JPMorgan, the EPRA Europe index posted its worst ever monthly performance in October, slumping 21.5 percent -- almost double the second worst month in June 2008, when European property stocks dived 12.2 percent.
In its inaugural note last week, Nomura's European property equity research team slapped a "Buy" tag on the sector and suggested stock price corrections had overstepped the mark.
"While real estate is set for a volatile end to 2008 and a difficult 2009, REIT valuations on 50 percent discounts and 6 percent-plus dividend yields look extreme," Nomura said.
(Editing by David Cowell)