Jan. 22 (Bloomberg) -- Land Securities Group Plc, the U.K.'s largest real estate company, sold more than 500 million pounds ($970 million) of assets at a profit in the fiscal third quarter as property prices fell. The shares climbed the most in 22 months.

The sales in the three months ended Dec. 31 reaped 5.6 percent more than the commercial properties' estimated value at the start of the quarter, the London-based company said in a statement today. Land Securities, the world's fourth-largest real estate investment trust, has already leased 93 percent of the 241,700 square meters (2.6 million square feet) of development space due for completion in fiscal 2008.

Commercial real estate prices fell 10 percent in 2007, including a 4.2 percent drop in December, as turmoil in the credit markets caused investment to slow and hurt demand for office space. Retail spending also stalled as consumers struggled with the impact of higher mortgage payments.

``Because of the speed of repricing, there will be income- producing investment properties that will be attractive,'' Chief Executive Officer Francis Salway said on a conference call with reporters. ``That may come sooner than we originally thought.''

Land Securities shares jumped 119 pence, or 7.9 percent, to 1,620 pence in London, the biggest gain since March 22, 2006, when they surged 13 percent. This year, the stock has added 7.6 percent, while the benchmark FTSE 100 Index has slumped 11 percent and the FTSE 350 Real Estate Index, which also had its biggest gain in 22 months, has advanced 5.1 percent.

The FTSE 350 Real Estate Index plunged 38 percent in 2007, compared with the FTSE 100 Index's 3.8 percent gain.

More Buyers

Land Securities anticipated the drop in prices and sold more than 2 billion pounds of properties in 2007, said Salway. The decline is likely to slow because more buyers have emerged, he said. The company had 500 million pounds available at the end of 2007 for acquisitions, Finance Director Martin Greenslade said on the conference call.

``The market is increasingly pricing in that the worst is over,'' said Harm Meijer, a London-based analyst at JPMorgan Chase & Co. with an ``overweight'' rating on the stock, by telephone. ``Their comments reinforced that view.''

Land Securities revalues its assets twice a year and doesn't publish earnings on a quarterly basis. The company didn't elaborate on its plan to split into three businesses: one based on London offices, another on shopping centers and the third on property management services.

Completed Developments

The company expects to complete 148,600 square meters of office developments in central London in fiscal 2008. Tenants have been found for 94 percent of that space.

The company sold 318 million pounds of office assets in the fiscal third quarter, as well as 190 million pounds of retail properties, at a profit after costs of 17.7 million pounds.

The sales, which were almost three times the annual average of disposals, accounted for almost 10 percent of all commercial property transactions in the U.K. in the final three months of the year, according to Salway.

Land Securities plans to cut back on central London developments and complete a total of 25,400 square meters of office space in the area over the coming two years.

``We believe this is an appropriate level of activity, given our outlook for the City of London market over the next two years,'' Salway said in the statement.

The company confirmed it will pay a dividend of 16 pence a share for the third quarter.

To contact the reporter on this story: Peter Woodifield in Edinburgh at pwoodifield@bloomberg.net.

Last Updated: January 22, 2008 12:02 EST