The state of Dubai could buy Minerva, one of London's largest property developers, which is pursuing ambitious schemes, including large City office developments and the rebuilding of Croydon's central shopping centre.

The company's shares shot up yesterday after Limitless, part of the multibillion-pound Dubai World group of companies owned by the Gulf state, said that it was “in the very preliminary stages of considering its options in respect of Minerva”. Limitless is taking advice from UBS. Minerva, headed by Salmaan Hasan, is taking advice from Citigroup. It told investors yesterday that it had “received no proposal from Limitless and therefore has nothing to respond to”.

If the takeover went ahead it would be seen as a bold bet that prices of London offices, which have fallen by up to 25 per cent since last summer, may be close to bottoming out.

The move on Minerva, which last valued its property assets at nearly £700 million, would be the largest of a string of investments by Middle Eastern investors in London commercial property over the past year. Minerva turned in £114 million of pre-tax losses for its first half ending December 31 after being forced to take a £108 million writedown on its property developments. The company's schemes include the construction of The Walbrook, a 445,000 sq ft City office block. Minerva is also building a huge City office complex behind Aldgate station called St Botolph's, covering 560,000 sq ft.

Minerva's plans to redevelop about one million sq ft of Croydon town centre into a new shopping district were dealt a blow this year after a deal to sell a 50 per cent stake in the scheme to Lend Lease, its construction contractor for the project, was aborted. Lend Lease's investment depended on the parties landing a large retailer as an anchor tenant, thought to be John Lewis, but a tenancy agreement has yet to be signed. Talks with John Lewis continue.

Minerva is due over the next few weeks to submit a planning application for the Ram's Brewery site in Wandsworth, South London, bought for £83.5 million. It is expected to be turned into nearly 1,000 flats, shops, restaurants and offices.

Minerva is relying on funding for its entire development programme from bank debt and cash generated from turning an old hotel on Lancaster Gate overlooking Kensington Gardens into 81 multimillion-pound luxury flats. Minerva has sold nearly one third of the flats off-plan for £100 million of future revenue.

Minerva is expected to reveal further writedowns on its holdings when it delivers its third-quarter trading update next week. The company had net debts of £292 million at December 31 after borrowings rose £71 million in six months. There were cash and short-term reserves of £110 million.

Shares in Minerva rose 16p to 116p yesterday, giving the company a market value of £188 million. In June last year, at the height of the boom in commercial property, Minerva shares were trading at 423p.

Middle East movers

ExCeL
The Abu Dhabi National Exhibitions Company this week bought the largest exhibition venue in London for £325 million

Shard of Glass
In January investors led by Qatar Islamic Bank and QInvest, the Islamic investment bank, bought 80 per cent of the London Bridge Quarter, including the proposed 1,016ft London Bridge Tower, dubbed the Shard of Glass. Total build cost: £1.4 billion

Heron Tower
In March last year Gerald Ronson sold stakes in his 670ft Heron Tower to the State General Reserve Fund of the Sultanate of Oman and Strategic Real Estate Advisors, a Middle East investment group.

Total build cost: £500 million

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