Capital & Counties trading well ahead of Shaftesbury merger

Capital & Counties (Capco), the London and JSE-listed REIT invested in the West End of London, said its Covent Garden estate was externally valued at £1.82 billion (R37bn) as at June 30, which represents a five percent increase for the first half of its financial year.

The valuation increase is substantial, given that retail-focused commercial property valuations, globally and particularly in London, either declined or barely moved through the Covid-19 pandemic.

“The movement over the first half was driven by an increase of four percent in ERV (estimated rental value) to approximately £79m, as well as a reduction in the equivalent yield of six basis points to 3.82 percent, reflecting asset management and leasing activity across all uses,” Capco said in a trading update, released on Friday.

Capco said last month that it would do an all share merger with UK commercial property REIT Shaftesbury – which also owns property assets in the West End – that would leave Capco owning 100 percent of Shaftesbury.

Capco said the Financial Conduct Authority had approved a circular on the merger and a prospectus for the new Capco shares to be issued.

It said its operational metrics continue to be positive, with strong leasing demand ahead of ERV across all uses and high occupancy levels.

Eleven new brands opened during the period, while footfall continued to trend towards pre-pandemic levels and customer sales in aggregate were ahead of 2019, reflecting the appeal of Covent Garden and London's West End.

At June 30, Capco had liquidity of £439m, which included cash of about £139m and £300m of undrawn facilities.

Capco repaid £200m of drawn debt comprising £75m private placement loan notes and the £125m loan secured against shares in Shaftesbury.

The Covent Garden loan to value ratio was about 20 percent. Capco intends to release its interim results on August 2. Capco’s shares traded 0.5 percent higher at R29.36 on Friday.

BUSINESS REPORT