Capital & Counties Properties (Capco) said yesterday an independent valuation of its West End London retail estate Covent Garden had been revised upward by 4.6 percent in the second half of its financial year.
The increase in valuations is noteworthy as London property, particularly retail, have reported falling or flat valuations through the pandemic as consumers stayed away from city centres and online shopping gathered pace.
Capco chief executive Ian Hawksworth said in a trading update that consumers continued to be attracted to what he said was the West End’s “most vibrant destination”.
Capco’s share price increased by up to 1.04 percent to R36.96 on the JSE yesterday morning after the trading update was released. “We are pleased with the strong levels of leasing activity and improving market indicators that have contributed to a valuation uplift in the second half,” he said.
As at December 31, the independent property valuation of Covent Garden came to £1.7 billion (R35.67bn), representing a like-for-like increase of 4.6 percent in the second half of the year, and an overall movement of -0.6 percent for the full year.
Hawksworth said the second half movement was driven by a 3 percent increase in ERV (estimated rental value), reflecting positive leasing activity and high occupancy levels across the estate, as well as a reduction in the equivalent yield of 5 basis points to 3.88 percent.
“The valuer’s assumption on loss of near-term income has been reduced from £11 million to nil,” the company said.
Rent collection for the first quarter of 2022, invoiced in December, stood at 86 percent, adjusted for monthly payment plans.
Capco’s investment in Shaftesbury shares was valued at £596m based on a share price of 615 pence per share on December 31 (June 30, 2021: £550m based on a price of 569.5p a share).
The blended acquisition cost was 517p per share (before expenses) in 2020.
Disposal proceeds of £77m were received in the second half from the freehold interest in 31-33 Bedford Street for £39.5m, a residential apartment on King Street for £5m, 22 units at Lillie Square for £43.6m (£21.8m Capco share of which £4m had been received in the first half); and the final £15m instalment of deferred consideration from the Earls Court sale.
Capco said it had a strong balance sheet and access to significant liquidity of £652m, including cash of about £342m. Year-end debt within Covent Garden of £250m resulted in a loan to value ratio of 15 percent.
BUSINESS REPORT ONLINE