Terrace Hill, the debt-burdened AIM-listed developer, has swung to a pre-tax H1 loss of £8.363 million compared to a £1.9 million profit in H1 2011.

TH is in the process of exiting the residential investment property sector, selling £90 million of its portfolio. 574 properties went to Swedish property investor Akelius for £75.4 million, which has caused a loss of £0.5 million on disposal. It is also involved in a Scottish JV where the partners have decided not to put further finding in to meet banking requirements, forcing TH to take a full £4 million provision for loss on that investment.

It is focussing on commercial property development in general and food stores in particular. This market is seen as having solid prospects despite recent statements by Tesco about reducing its development budgets, and Sainsbury's and M&S to a lesser extent. TH reports that there is still good demand from Asda and Morrisons and also Sainsbury's for the right location.

TH has sold a site at Whitchurch recently to Sainsbury's and has pre-let sites at Sunderland, Herne Bay and Sedgefield to them as well. It is on site at Skelton to build a 41,800sq ft Asda.

Robert Adair, Chairman of Terrace Hill, said: "I am encouraged by the group's progress in meeting its key objectives: growing our foodstore development business, maximising the realisation value of our residential and other legacy assets and reduction of debt. Whilst our EPRA NAV has remained fairly static, this does mask the substantial progress made and I look forward to seeing further advances in the current and future periods."

Shares in Terrace Hill closed last night at 9.5p which values the firm at £20.7 million, whilst the EPRA Net Asset Value per share is 27.7 pence or £59 million overall.