* FY adjusted diluted NAV plummets 66 percent to 593 pence
* Misses average market forecast of 601 pence
* Net debt falls 27.1 percent to 3.92 billion sterling (Adds further details)
By Sinead Cruise
LONDON, May 14 (Reuters) - Land Securities, Britain's biggest property company, said the value of its portfolio fell by 4.74 billion pounds ($7.1 billion) in the year to end-March, scotching talk of an imminent end to the UK real estate slump.
The FTSE 100 company, seen by many as a bellwether for Britain's under-pressure quoted property sector, said adjusted diluted net asset value (NAV) per share dropped 66.4 percent to 593 pence, below the average forecast of 601 pence given by seven analysts but within the forecast range of 589-607 pence.
Its investment properties are now valued at 7.93 billion pounds and the dividend has dropped 10.4 percent to 51.1 pence.
"While the market may see some pockets of stabilisation for certain asset types, we expect conditions to remain challenging in a weak economic environment, with vacancy rates rising and rental values weakening, putting pressure on rental income," Chief Executive Francis Salway said in a statement.
Land Securities reported a pretax loss of 4.77 billion pounds for the period, reflecting an unremitting repricing of property since the credit crisis gripped in summer 2007.
It said gross rental income across its London and Retail property divisions rose by a total 14.3 million pounds, but its rental void rate -- the amount of empty space in its portfolio -- rose to 4.6 percent from 3.5 percent last year.
Shares in the company, which owns or part-owns the Bullring Shopping Mall in Birmingham, the Piccadilly Lights and the Cardinal Place office complex in central London, have tumbled by almost 60 percent in the past year.
The slide is more than double the average fall in the value of commercial bricks and mortar property assets in 2008, data from benchmark compiler Investment Property Databank shows.
But despite fears for continued market turmoil Land Securities said its financial future had been bolstered by 1.1 billion pounds of asset sales and its 756 million pounds equity issue in February.
Net debt dropped 27.1 percent to 3.92 billion pounds and smaller interest payments helped to boost revenue profits by 10.6 percent to 314.9 million pounds. (See www.reutersrealestate.com for the global service for real estate professionals from Reuters)