THE landlord of one of Liverpool’s landmark office properties is facing an uncertain future due to low occupancy levels.

Cheshire property firm Pochins has said it wants to pull out of the joint venture company that owns Exchange Flags in the heart of Liverpool’s business district. It has also emerged that Pochins joint venture partner, Liverpool-based UK Land & Property, is struggling to fund its share of the costs of owning the building.

Lettings have been scarce and two- thirds of the Walker House wing of Exchange Flags remains empty. Earlier this year, Pochins began moves to exit the agreement and those talks are still going on.

Pochins and UKLP acquired the two wings of Exchange Flags, Horton House and Walker House, in 2006 and 2007, respectively.

The joint venture reportedly paid £15m for Horton House and pledged £15m to refurbish Walker House.

But the joint venture, known as UKLP Exchange Flags, has not met rental targets and, in its annual accounts for 2009/10, Pochins said: “Action has been taken in connection with two large refurbished properties in Liverpool where the group’s joint venture partner has been unable to bear its share of the holding costs. This has been aggravated by the continuing significant level of void space.

“A conditional agreement has been entered into whereby Pochins would be released from further involvement in these properties.”

It went on: “Joint ventures at Exchange Flags Liverpool, in partnership with UK Land & Property have been the most challenging schemes.

“Some progress has been made with lettings during the year, however, occupancy levels, particularly at Walker House, fall below that required to generate sufficient income. Negotiations, therefore, continue with partners and funders to extricate the group involvement from these schemes.”

Accounts for the UKLP Exchange Flags joint venture, signed off on June 17, reveal a dramatic fall in the value of the development from £36.1m in 2008 to £23.5m last year. That compares with £28m of bank loans.

The UKLP Exchange Flags accounts also reveal total liabilities of £4.66m, due mostly to the write-down in value. It compares with total assets of £8.8m a year earlier. It has also suffered from £1.5m of trading losses.

UKLP’s accounts, signed off on May 25 this year, show a deficit of £466,929, which was up from £52,614 a year earlier.

And they detail attempts to secure the financial position of the business by restructuring its debt and equity position.

“Negotiations are currently under way which the directors expect to result in a significant injection of new equity, allowing the group senior debt to be reduced by approximately 50%.”

UKLP managing director Simon Parker told LDP Business: “As with a number of property companies, we have been collectively looking at ways to address the equity/ debt structure within the portfolio, working alongside our joint venture and banking partners.”

Pochins chief executive John Moss declined to comment on the grounds of “bank sensitivity”. However, Pochin’s has managed to offload another costly joint venture, in Birkenhead.

Its annual meeting heard the Grange Road scheme to build a 95,000 sq ft Asda store with Alderley Edge- based Castlewood Developments has been sold to Asda to avoid further losses on the site, which Pochin’s said had been “expensive for the group”.

Castlewood Developments ceased trading this year, after the demise of its owner, Robert Shaw.