Minerva plc, the quoted real estate company, today announces its
Half Year Results for the six months ended 31 December 2009.
Corporate highlights
During the period the Company was the subject of an unsolicited bid
from its largest shareholder, Kifin Limited, which made an offer of
50 pence per share to acquire the remaining shares in Minerva it
did not already own. The Board considered that this offer
significantly undervalued the Company and its prospects, a view it
communicated to shareholders and ultimately the takeover attempt
was unsuccessful. Whilst this was a distraction for the Company,
the Board has maintained its focus on delivering value for all its
shareholders from Minerva’s portfolio of first class developments
in London.
Financial highlights
- Investment property valuation increase of 9.7 per cent (2008:
decline of 26.5 per cent).
- Trading property valuation increase of 12.2 per cent (2008:
decline of 7.7 per cent).
- Profit after tax of £45.6 million (2008: loss of £186.7
million).
- Net assets per share, reflecting trading properties at cost,
increased to 1.9 pence per share (30 June 2009: net liability of
28.8 pence per share).
- Diluted EPRA net asset value per share increased by 116 per
cent to 101.9 pence (30 June 2009: 47.1 pence).
Operational highlights
Progress continues on the Group’s landmark developments in London
and a number of key milestones have been achieved in the past six
months:
- Successfully completed the refinancing of a number of the
Group’s loan facilities. The Group now has circa £1 billion of loan
facilities in place, with no scheduled loan maturities either in
the current or next financial year.
- Pre-leased 145,000 sq.ft. of The St Botolph Building to
international law firm, Clyde & Co at £48 per sq.ft. The lease,
which is for a term of 20 years, contains upward only rent reviews
and no break clause. Approximately 45 per cent of the office space
in this building is now pre-let, with practical completion on
schedule for the summer of this year.
- Achieved practical completion on The Walbrook Building earlier
this month. We are confident that, with the extremely limited
supply of new offices in the City of London, the building will be
successfully let on attractive terms. Discussions continue with
prospective tenants.
- Construction at Lancaster Gate is advancing, with Planning
Committee approval (subject to completing a S106 Agreement)
recently obtained for this development to be an ‘all private’
scheme. Further ‘off–market’ sales at pricing levels significantly
ahead of previously obtained prices have been achieved. The
official marketing campaign of this ultra-prime residential
development, incorporating a show apartment, will commence in late
Spring 2010.
- Presented our case at the planning inquiry for the Ram Brewery
development in Wandsworth, which concluded in December 2009 and a
decision is expected by the middle of 2010.
- Acquired the minority equity interest and related profit share
in the Odeon Kensington from Northacre plc for £2.25 million in
December 2009. This scheme is now wholly owned by Minerva.
- Sold the property in Wigmore Street for £40.75 million,
realising a 20 per cent premium over the book value at 30 June
2009.
Oliver Whitehead, Chairman of Minerva plc, said:
“There is real and growing evidence to show that we have now passed
the cyclical low in the commercial property market. Minerva, with
its well-located, high-quality portfolio of current and future
developments, its strong funding platform and its experienced team,
is well placed to outperform in an improving market
environment.”
All Enquiries:
Minerva plc
Salmaan Hasan, Chief Executive 020 7535 1000
Ivan Ezekiel, Finance Director
Tim Garnham, Group Development Director
Brunswick Group LLP
Simon Sporborg/Tom Williams 020 7404 5959
Chairman's statement
Despite the distraction created by an unsolicited and ultimately
unsuccessful takeover attempt, the Board has maintained its focus
on delivering value from Minerva’s portfolio of first class
developments in London. A number of significant milestones have
been achieved in the financing, leasing and development areas of
Minerva’s business.
Operational progress
In September 2009, I was pleased to report that we had
successfully concluded the refinancing and restructuring of the
Group’s loan facilities. Among other benefits, this provides the
Group with no scheduled maturities in the current or next financial
year and a sound financial platform to progress our
developments.
With project finance securely in place, construction continued
apace on our City of London properties. We achieved practical
completion on The Walbrook Building earlier this month. We continue
to remain confident that, with the extremely limited supply of new
offices in the City of London, this property will achieve
attractive leasing terms.
The St Botolph Building is planned to be completed in the summer
of 2010. In December, I was pleased to report that Minerva achieved
an important leasing milestone with the agreement to pre-let
145,000 sq.ft. of the building to international law firm Clyde
& Co. This was concluded on competitive terms in what is now
evidently an improving market for landlords. Approximately 45 per
cent of the office space in this building has now been pre-let.
These two prime office developments are located in the City of
London, where competing supply for such efficient large floor plate
buildings has been severely curtailed by the scarcity of
development funding and discussions continue with a number of
prospective tenants for the remaining space.
We continue to make encouraging progress with our other projects.
Construction at Lancaster Gate, behind the retained façades, is
advancing, with the official launch of this ultra-prime
development, incorporating a show apartment, scheduled for late
Spring 2010.
Together with our advisory team, the Group presented its case at
the planning inquiry for the Ram Brewery development in Wandsworth,
which concluded in December 2009. A decision is expected by the
middle of this calendar year.
In December 2009, following an extensive and competitive sale
process, Minerva sold its property located at Wigmore Street,
London W1 for £40.75 million, which represented a 20 per cent
premium to the book value as at 30 June 2009.
In the same month, we acquired the minority interest in the Odeon
Kensington, London W8 from Northacre plc, ensuring that the full
profits from this development will accrue for the benefit of
Minerva and its shareholders.
While discussions continue regarding the future of the Croydon
Estate, we have been successful in generating short-term income
from the estate, through the leasing of retail units on the
site.
Financial results
There is a growing body of evidence, including transactions,
market indicators and industry analysis showing that the UK real
estate market continues to recover. A consensus has formed that we
have passed the cyclical low for commercial property valuations,
which commentators feel occurred at around the time when the
Company last reported in the Summer of 2009.
This improvement in market conditions, coupled with the actions
taken, has had a significant effect on the value of the Company’s
property portfolio, which is now valued at £979.9 million (30 June
2009: £807.0 million); an increase of 10.6 per cent in the period,
after adjusting for expenditure and disposals. With the excellent
funding platform we have in place, Minerva is geared to benefit
from a recovering property market. This has been clearly
demonstrated by our results for the period, where a 10.6 per cent
net increase in the portfolio value has delivered a 116 per cent
increase in diluted EPRA NAV per share.
Abortive offer for the Company and General Meeting
On 17 November 2009 KiFin, which held 29.9 per cent of the issued
shares of Minerva, made an unsolicited offer to acquire the rest of
the share capital of the Company at 50 pence per share. The Board
of Minerva considered that the offer significantly undervalued the
Company and recommended that shareholders did not accept it. The
offer lapsed on 8 January 2010 with acceptances representing just
0.08 per cent of the issued share capital of Minerva.
At the Annual General Meeting of the Company held on 4 December
2009, KiFin voted against a number of the resolutions proposed,
including my own reappointment. Excluding KiFin, over 99 per cent
of shareholders who voted supported the resolutions but, because
insufficient shareholders cast their votes, KiFin was able to
defeat those resolutions. Following the Annual General Meeting, the
Board independently resolved to reappoint me as Chairman for the
duration of the offer. The Board took this decision based on its
firm belief that Minerva should not be without an independent
Chairman whilst being subject to an unsolicited offer and as it
believed that I would properly represent the interests of all
shareholders. This decision was also taken with reference to the
level of support from independent shareholders.
The Board continues to believe that I should remain as independent
Chairman and has decided to convene a General Meeting to allow
shareholders to vote on this. A notice of this meeting has been
sent to shareholders recently. The Board considers KiFin’s actions
at the Annual General Meeting to have been deliberately disruptive
and it urges shareholders to cast their votes at the General
Meeting on 5 March 2010 in favour of the proposed resolution, to
ensure the interests of all shareholders are represented and
protected.
The Board
On a separate matter of Board representation, in the 2009 Annual
Report and Accounts the Board stated that it would look to
supplement its non-executive membership when appropriate. Following
the financial restructuring of the Company’s loans and the lapse of
KiFin’s offer, the Board decided to make such an appointment and I
am pleased to report, as previously announced, that Martin Pexton
will be joining the Board on 6 April 2010. We welcome the
significant experience that Martin will bring and we will, in due
course, look to further strengthen the Board with the appointment
of another non-executive Director.
Outlook
Minerva has a property portfolio of well-located, high-quality
office and residential developments which are being delivered into
supply constrained markets, both in the City and West End of London
respectively. The substantial uplift in the value of our property
portfolio reflects improving market conditions and signifies a
recovering investment and occupational market, specifically in the
sectors in which we operate. Minerva, with its prime real estate,
its secure funding platform and its skilled and dedicated
management team, is well-positioned to deliver and benefit from a
further improvement in the property market.
The Board is focused on, and remains fully committed to,
delivering the full value potential of the Company’s portfolio for
all shareholders.
Oliver Whitehead
Chairman
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