Minerva counts cost of world liquidity crisis

The way in which last autumn's world liquidity crisis is working its way through industry and to the property sector in particular is illustrated in the interim results of quoted real estate group Minerva.

Not only that, but the crisis means commercial yields are falling which endorses the company's decision to increase its focus on residential developments.

Chairman Oliver Whitehead says that although the group has £300 million of funding is in place for its projects, notably at Walbrook and St Botolphs in the City of London, uncertainties in the financial markets have adversely affected the funding of real estate transactions.

'Furthermore, the difficulties facing developers in the financial markets have also reduced the potential supply of speculative developments, particularly in The City of London,' he said.

'As a result, our major projects in the City are expected to be delivered into a more supply-constrained environment from 2010 onwards.'

Minerva estimates the current vacancy rate in the City at 7.9% which will rise to 10% this year and fall in to 9% in 2009. As there is very little space likely to come through the market from 2010 onwards, it then expects the rate to fall.

The first tenant at St Botolphs, with 84,000 square feet, is Lockton International, the largest private insurance broker in the US.

Construction has started at Walbrook and is due for delivery by construction group Skanska in December 2009.

Revaluation of the investment properties of Wigmore Street-based Minerva (MNR) give it a deficit of 14.4%.

Net asset value of the group per share comes down from 327.9p at the end of June to 266p at the end of December.