Santander in talks to lease Walbrook office block in City

Property developer Minerva is in advanced talks with Spanish bank Santander about leasing its new Walbrook building in the City of London, which has been empty for a year. Minerva, which is in takeover discussions after fighting off a revolt and an unwanted bid from its largest shareholder, South African entrepreneur Nathan Kirsh, has struggled to find a tenant for the 410,000 square foot office building in Cannon Street. Chief executive Salmaan Hasan blamed a lacklustre market, dismissing suggestions that Minerva's lenders might have imposed certain rental levels. He noted that the majority of City lettings last year were small, with only two large deals: UBS signing with British Land and Blackstone at Broadgate and Bloomberg's decision to have an office block constructed on a site owned by Legal & General. Tim Garnham, Minerva's development director, said: "The market was quite quiet in the second half of last year. It has begun to improve in the last few weeks but the City is not racing away." Bloomberg was interested in the Walbrook building but walked away last year. Schroders, another potential tenant, is also likely to rent elsewhere. Insiders say Minerva's discussions with Santander are "reasonably advanced" although it is not a done deal. The company is also marketing Walbrook on a floor-by-floor basis in case it fails to sign up a sole tenant. It said it had "received renewed interest from prospective tenants" since the start of 2011. When it does do a deal, Minerva is likely to benefit from rising City rents, driven higher by a shortage of new office space. It is also looking to fill the top floors of its other big development in the Square Mile, St Botolph. About 45% of the office space has been let to tenants including US insurance broker Lockton and law firm Clyde & Co and the bulk of the retail space has also been filled, with cafe chain Eat taking some space in the entrance hall. Minerva has also pre-sold 60% of its luxury apartments at Lancaster Gate, overlooking Hyde Park. The property firm reported a sharp drop in half-year profits to £10.4m from £45.6m a year ago. However, its net asset value rose 6.2% to 140p a share as the value of its developments increased by 2.8% to £761m. The group was refused planning permission for its twin-towers design for the redevelopment of the Youngs brewery in Wandsworth and now hopes to resubmit an application this summer. • This article was amended on 23 February to change the picture caption