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Capital and Counties, Capco (LSE:CAPC), owner of Covent Garden, is selling at less than net current asset value, and therefore appears to be a bargain. However, Mr Market marked it down because he fears that so much rental income will be lost due to Covid-19 and property investors will demand higher yields that property values will decline significantly wiping out a lot of the balance sheet assets – an issue dealt with in my last newsletter. Mr Market also fears that the loss of cash inflows and profits will result in it being unable to manage its debt load.
Debt
The table provides the key data on debt. Note that in 2020 debt rose as the company drew down some of its revolving credit facility. But this was not distressed borrowing. An asset was bought with the money: 26% of Shaftesbury, which owns 15.2 acres of West London including Carnaby Street and Chinatown.
| June 2020 | Dec 2019 | Dec 2018 | ||||
| Cash, £m | 295 | 153 | 33 | |||
| Loan notes | -548 | -546 | -548 | |||
| Bank loans | -63 | |||||
| Finance lease obligations | -10 | -11 | -6 | |||
| Revolving credit facility maturing between 2024 and 2037 | -449 | nil | nil | |||
| Net debt | -712 | -404 | -585 | |||
| Undrawn committed facilities under the RCF, £m | 255 | 715 | 802 | |||
| LTV ratio (net debt to property value) | 32% (Limit set by banks 40%) | 16.3 |
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