Shares in InmobilIaria Colonial were set to decline on Thursday after Investment Corporation of Dubai (ICD) failed to seal a partial takeover deal with the Spanish property company's creditor banks.

After a negotiation deadline passed on Wednesday, Colonial's main shareholders and ICD said they had not been able to meet a list of conditions needed for the offer to move ahead -- the second time an ICD offer for Colonial has fallen through.

ICD's latest bid offered 1.19 euros per share for Colonial's rental business, which accounts for most of its profit and asset value. Previously it had looked at buying the whole company.

'The news is negative and we don't rule out strong losses on Colonial shares,' Banesto brokers said in a note.

Pre-trade prices showed Colonial shares at 0.95 euros. The stock closed 3.8 percent lower at 1.02 euros on Wednesday as investors doubted a deal would be done.

'We regret that, despite best efforts by all parties, no agreement could be found,' ICD chief executive officer Mohammed al-Shaibani said in a statement on Thursday.

ICD said on Wednesday it would be open to doing a new deal over Colonial on different terms if it were possible.

Spanish newspaper ABC said banks owed millions of euros by Colonial's main shareholders had asked ICD to meet Colonial's creditor banks again on Monday to try to negotiate a seven-month moratorium on its debt.

During that time, the company could split in two and ICD could move ahead with its takeover bid for the rental arm, whose assets include prime office space in Paris and shopping centres in Spain.

ICD tabled an offer last week to acquire the rental activities of Colonial at 1.19 euros ($1.87) per share, subject to conditions that needed to be met by Thursday, it said.

ICD said on Wednesday it would not buy Colonial after it failed to reach agreement with the company's creditors. - Reuters