Minerva swings back to profit as it focuses on London

Despite concerns of a market slowdown, UK property developer Minerva posted a pre-tax profit in its year to June as it moved forward with several projects in and around London.

Chief executive Salmaan Hasan said he was ‘reasonably confident’ about the London market’s future in spite of the concern. He says new projects being put on hold in a cooling market could end up benefiting developments already under way, notably Minerva’s (MNR) .

These include two office developments in the City of London, at Walbrook and St Botolphs, for a total of 995,000 square feet of offices and retail space.

Demolition work on both sites has been completed and the two buildings are scheduled to open in December 2009.

‘[While] the disruption in the financial markets has introduced some uncertainty into the real estate markets, we continue to believe that [Minerva’s] development model remains well-placed in the current London development cycle,’ Hasan said in a conference call with journalists this morning.

‘The truth is that it’s too early to tell what the full impact of the turmoil in the markets will bring…[but] so far, we haven’t seen a significant diminution in stated demand.’

Minerva’s other major projects in the capital include high-end residential developments at Lancaster Gate and in Kensington near Holland Park, and a one million-sq-ft mixed use development in the former Young’s Ram Brewery in Wandsworth.

London-based Minerva reported a pre-tax profit of £16.3 million in the year to 30 June compared with a loss of £6.9 million in the same period a year earlier. Net asset value rose 2.1% in the second half and 5.3% in the full year to 327.9p.

The results were in line with market expectations, but Minerva’s shares fell in early trading and at 10:30am were down 5.375p, or 2% a share to 262.875p.

They have fallen about 12% from a year ago, although they soared as high as 426.5p on 10 May. The real estate sector has been hit by five interest rate rises since last August, although the London market, where Minerva’s business is focussed, has fared better than most other parts of the UK.