Institutional landlord Landsec has revealed a near £1.2bn hole in its property portfolio and warned that it does not expect the economy to recover to pre-coronavirus levels until 2022 at the earliest.

For the financial year ending March 31, 2020, Landsec said the value of its property portfolio fell by 8.8%, or £1.17bn, to £12.8bn, with its retail portfolio in particular taking a hammering.

The value of its retail property portfolio fell 20.5% during the period, which Landsec said was a direct result “of the challenging environment and ongoing structural changes” in the sector, which have only been further exacerbated by the coronavirus.

Revenue profits fell 6.3% to £414m for the period, while losses before tax ballooned to £837m.

The coronavirus lockdown has seen Landsec close four of its retail assets completely, while only those schemes with supermarkets or pharmacies remain open in any capacity.

It said that rent collection rates in March and early April were “impacted negatively across the portfolio”, with an average collection rate of 63% compared with 94% for the same period in 2019.

Landsec warned that rent collection rates in June were “likely to be worse” than in March, given that most of the negative impact from the virus has fallen in the year’s second economic quarter.

It said that, while it was too early to accurately predict outcomes, “it seems prudent to plan for more business failures and higher vacancy rates across our portfolio, particularly in leisure and retail”.

The landlord also said that generally it did not expect the UK economy to recover to pre-coronavirus levels “before 2022 at the earliest”.

New chief executive Mark Allan said: “I join Landsec at an extraordinary time. The effects of Covid-19 are accelerating ongoing structural trends across the real estate sector, while its longer-term societal and economic consequences are yet to be determined.

“Landsec’s strong balance sheet and resilient operational performance have enabled us to respond to immediate challenges posed by Covid-19 with speed and decisiveness.

“Our £80m rent relief fund has offered targeted support to occupiers, alongside broader options of rent deferrals and monthly payments, and our £500,000 of community grants is providing financial assistance to our charity partners.

“I am confident Landsec is approaching the future from a position of strength. We are prepared to be bold in our thinking as we navigate both the challenges and opportunities arising in the long term from changing market trends, and will not lose sight of our wider sustainability objectives.

“We will continue to lead the sector on major issues, such as climate change, and remain committed to acting as a force for good in the communities in which we operate.”