On Friday the stock market judged Minerva to be worth £67m. This morning the property company holding 1m sq ft of almost-finished developments in the City reported that liabilities of £847m exceeded assets by £46m. Does that mean the £113m gap between what the market thinks the company is worth and what they auditors thought on 30 June is down entirely to the hope value of the two sites at Walbrook in Cannon Street and St Botolph's in Aldgate?
St Botolphs, Aldgate
Not entirely. But clearly letting and selling the 445,000 sq ft in Cannon Street and the 560,000 sq ft in Aldgate are life or death deals for a business brought back from a near-death experience by chief executive Salmaan Hasan two weeks ago. Then he persuaded the banks to extend deadlines on loans of nearly £700m out to mid-2011: and he was given another £300m to keep going.
This was an extraordinary achievement for Hasan, whose experience as the head of property finance at Deutche Postbank in London will have come in handy. Sterling work. He will of course have been helped by the growing perception that Minerva has two of only five mega-developments in the City, where Cushman & Wakefield said last week occupiers are starting to "jostle for space."
The banks have presumably worked out that the end value of both developments adds up to more than the £570m given in loans. A rough (and generous) calculation using the £40 a foot paid by Nomura at Watermark Place, using a 6.5% yield, shows a small surplus. But that forgets the 4 years rent free given to Nomura. Thanks to Hasan Minerva will survive. But unless yields fall to 5% by his mid-2011 refinancing deadline, the sale of both sites will yield returns that do not add up to the present hope value.