TIDMCAPC
RNS Number : 5590T
Capital & Counties Properties Plc
21 July 2020
21 July 2020
CAPITAL & COUNTIES PROPERTIES PLC ("CAPCO")
TRADING UPDATE AND PUBLICATION OF CIRCULAR
Capco today releases a trading update and further to the
announcement on 30 May 2020, intends to publish a circular on the
proposed acquisition of a stake in Shaftesbury PLC. Financial
information below represents unaudited figures for the six months
ended 30 June 2020, and Capco's interim results for this period
will be released on 12 August 2020.
-- The Company is confident in the long-term resilience,
attractiveness of and prospects for prime central London, in
particular the West End
-- Covent Garden is a pedestrianised open air environment and is
well positioned as lock down measures ease and consumers return to
central London
-- Additional streets around the Piazza have been
pedestrianised, allowing for greater freedom of movement and
increased al fresco dining across the estate
-- As a responsible, long-term owner of the estate, Capco has
been working with local communities and continues to provide
assistance to local charity partners in the West End
-- The majority of retail and dining concepts on the Covent Garden estate have reopened
-- Capco has provided support to retail and hospitality
customers experiencing cash flow pressures, with rental agreements
being adjusted on a case by case basis to include deferrals and
turnover-linked arrangements where appropriate
-- Covent Garden total property value of GBP2.2 billion, a
decrease of 17 per cent since 31 December 2019
-- Acquisition of 20.94 per cent stake in Shaftesbury PLC
completed with a further 5.31 per cent agreed subject to
shareholder approval
-- Strong balance sheet with loan to property value of 32 per
cent, net debt to gross assets ratio of 26 per cent and GBP616
million of cash and undrawn facilities
-- GBP90 million of deferred consideration from the Earls Court
sale received in March 2020, with a further GBP105 million expected
to be received later this year and GBP15 million due in 2021
Covent Garden property valuation
As at 30 June 2020, Covent Garden total property value was
GBP2.2 billion, representing a 17 per cent like-for-like decrease
(31 December 2019: GBP2.6 billion). Substantially all of the
valuation movement relates to the retail, leisure and F&B (food
and beverage) portfolio which represents 75 per cent of total
property value. (Portfolio value by use represented by retail 52
per cent, F&B 20 per cent, office 16 per cent, residential 9
per cent and leisure 3 per cent). The main contributors were a 12
per cent (like-for-like) decline in ERV to GBP95.5 million, yield
expansion of 17 basis points to 3.82 per cent (equivalent basis)
and other movements including the valuer's assumption on loss of
near-term income (GBP31 million).
Supporting the re-opening of retail and hospitality tenants
On 23 March 2020 the majority of retail and F&B tenants
closed across the estate. Throughout this period of COVID-19
uncertainty, Capco's priority has been the health and safety of its
people, customers and visitors.
As a long-term investor in the estate, Capco took early action
ensuring the safety and security of Covent Garden whilst also
providing support on a case by case basis to customers experiencing
cash flow challenges as a result of COVID-19. This supports the
reopening of stores during this period of significant disruption,
ensuring the business is well positioned to benefit from a recovery
and prosper over the medium-term. Bespoke solutions have been
agreed which include rent deferrals, rent-free periods and other
arrangements reflecting the position of each customer. For certain
tenants which are experiencing short-term cash flow issues, rental
agreements will be linked to turnover for the second half of the
year in exchange for other provisions such as lease extensions.
98 per cent of Q1 2020 rents were collected. Rent collection for
the March (Q2) and June (Q3) quarter rent dates have been
significantly lower than normal levels with 44 per cent collected
for the second quarter and 27 per cent for the third quarter.
Overall 71 per cent of rent has been collected in the first six
months of the year compared to 99 per cent for the equivalent
period in 2019.
Quarterly rent collection summary
Gross Alternative
rents Received Collected arrangements Outstanding
GBPm GBPm % % %
--------- -------------- --------------- ---------- --------------- --------------
Q1 16.2 15.9 98% - 2%
Q2 16.9 7.5 44% 53% 3%
H1 2020 33.1 23.4 71% 27% 2%
Q3 2020 17.9 4.8 27% 67% 6%
--------- -------------- --------------- ---------- --------------- --------------
The majority of retail and hospitality customers on the estate
have reopened or are set to reopen imminently. Whilst initial
indicators are encouraging, the trading environment remains
challenging. It is too early to predict when footfall will return
to previous levels whilst physical office occupancy remains
significantly reduced, and with the ongoing travel restrictions and
fragile consumer sentiment.
Operational performance and leasing update
Capco began the year with a strong leasing pipeline however
activity levels were affected significantly by the pandemic from
early February onwards. 22 leasing transactions completed with a
rental value of GBP2.7 million (H1 2019: GBP13.0 million).
During this challenging period a small number of tenants have
entered into administration representing GBP3.0 million of passing
rent. EPRA vacancy has increased by 0.9 percentage points to 4.1
per cent (31 December 2019: 3.2 per cent). Approximately 12 per
cent of ERV is in or is held for development or refurbishment (31
December 2019: 8 per cent). Opportunities will be taken to ensure
that the best possible tenant line-up is maintained across the
estate. Notwithstanding the significant disruption to the
occupational market, leasing interest in the Covent Garden estate
has been encouraging.
Since the announcement of Capco's 2019 results, Bucherer's
expansion in the Royal Opera House Arcade is underway and its
opening is on track for later this year, while Ganni has opened its
new flagship on Floral Street and will be joined by American
Vintage later in the year. Jewellery brand Vashi is the latest
signing on James Street for a new London flagship store while
Bubblewrap and Belgian chocolatier Neuhaus have both agreed terms
to open in the Market Building.
Covent Garden offers a welcoming open air environment for
visitors. Capco is implementing a number of marketing initiatives
and collaborating with stakeholders to promote Covent Garden and
the West End, encouraging a return of footfall to normal levels
over time.
Capco continues to engage directly with the consumer offering
differentiated experiences. Covent Garden now hosts a new al
fresco, socially distanced dining area on the Piazza. With many of
the area's restaurants open for take away, it provides the
opportunity for visitors to dine outside in the heart of the West
End.
In partnership with Westminster City Council, there are
additional pedestrianised streets in the Covent Garden area to
allow for greater freedom of movement and use of outdoor space.
Newly pedestrianised streets include Henrietta Street, Floral
Street, Maiden Lane and Tavistock Street alongside extended
car-free hours for the Piazza and King Street. Further to this,
there are additional outdoor seating areas across these streets for
our restaurants, providing approximately 200 incremental outdoor
covers.
Capco remains confident in its tenant mix, continuing to focus
on concepts with strong financial covenants, differentiated
offerings, successful multi-channel programmes, close customer
relationships and brands that recognise the value of high-profile
locations with a complementary leisure and dining offering.
As a responsible, long-term owner of the estate, Capco has been
working with local communities and continues to provide assistance
to local charity partners in the West End. Financial aid has been
provided to COVID-19 funds supporting homelessness, food banks, the
elderly as well as hospitality and retail foundations.
Strong liquidity and balance sheet position
The financial information below represents unaudited figures as
at 30 June 2020:
- Group loan to property value of 32(1) per cent (31 December
2019: 16 per cent), reflecting property value and net debt as at 30
June 2020
- Group net debt to gross assets of 26(1) per cent (31 December
2019: 15 per cent), taking into account the value of the investment
in Shaftesbury shares, as at 30 June 2020
- Group undrawn facilities and cash of GBP616 million (31
December 2019: GBP895 million)
- Group net debt of GBP721 million (31 December 2019: GBP442
million)
- Capital commitments of GBP93 million (includes GBP88 million
in respect of second tranche of Shaftesbury shares) (31 December
2019: GBP14 million)
- Weighted average cost of debt of 2.6 per cent (31 December
2019: 3.0 per cent)
- Weighted average debt maturity of 4.4 years (31 December 2019:
4.9 years)
- There is significant headroom against the LTV covenant
position, and interest cover covenant waivers in respect of the
current financial year have been agreed with Covent Garden group
lenders to address interruption to near-term income.
1. Before GBP88 million investment in the second tranche of
Shaftesbury shares payable in August 2020 (subject to shareholder
approval) and receipt of a further GBP105 million of deferred
consideration from the sale of Earls Court expected later this year
(with the balance of GBP15 million due in 2021).
Acquisition of shareholding in Shaftesbury PLC
As announced on 30 May 2020, Capco agreed to acquire a 26.3 per
cent shareholding in Shaftesbury across two tranches ("the
Investment") for total consideration of GBP436 million, at a price
of 540 pence per Shaftesbury share.
The Investment comprises the acquisition of 64.4 million shares
for GBP347.7 million in cash, representing 20.94 per cent of
Shaftesbury's shares, which completed on 3 June 2020 (the "First
Tranche") and the proposed acquisition of a subsequent tranche of
approximately 16.3 million shares for GBP88.2 million in cash,
representing 5.31 per cent of Shaftesbury's shares (the "Second
Tranche").
Capco expects to publish a shareholder circular later today in
respect of the acquisition of the Second Tranche, which when
aggregated with the First Tranche, constitutes a Class 1
transaction for the purposes of the Listing Rules and is therefore
conditional on approval by shareholders at the General Meeting to
be held on 10 August 2020.
The Shaftesbury Investment is a unique opportunity to acquire a
significant stake in an exceptional mixed-use real estate
portfolio, adjacent to Capco's world-class Covent Garden estate. It
represents an attractive investment and entry price relative to
historical levels and the Board's view of the future long-term
prospects for prime central London. The Investment is consistent
with Capco's strategy to invest in complementary opportunities on
or near the Covent Garden estate.
Earls Court deferred proceeds
GBP90 million of deferred consideration from the Earls Court
sale was received in March 2020. In addition, a further GBP105
million of deferred consideration is expected to be received later
this year with the balance of GBP15 million due in 2021.
Lillie Square (50:50 joint venture)
The completion of Phase 2 continues with 66 units handed over in
the first half of this year, representing GBP81 million of cash
proceeds received (GBP40 million Capco share).
A further 120 units remain in Phase 2, of which 93 have been
pre-sold representing approximately GBP120 million of further
proceeds (GBP60 million Capco share). The property valuation of the
Lillie Square joint venture as at 30 June 2020 was GBP138 million
(Capco share), a slight decline (like-for-like) against the 31
December 2019 valuation of GBP177 million.
ENQUIRIES
Capital & Counties Properties PLC:
Ian Hawksworth Chief Executive +44 (0)20 3214 9188
Situl Jobanputra Chief Financial Officer +44 (0)20 3214 9183
Head of Commercial Finance and
Sarah Corbett Investor Relations +44 (0)20 3214 9165
Media enquiries:
+44 (0)20 7796
UK: Hudson Sandler Michael Sandler 4133
+27 (0)11 447
SA: Instinctif Frederic Cornet 3030
About Capital & Counties Properties PLC
Capital & Counties Properties PLC is one of the largest
listed property investment companies in central London and is a
constituent of the FTSE-250 Index. Capco's landmark estate at
Covent Garden was valued at GBP2.2 billion (as at 30 June 2020)
where its ownership comprises over 1.2 million square feet of
lettable space. Capco owns a 20.94 per cent shareholding in
Shaftesbury PLC. The Company is listed on the London Stock Exchange
and the Johannesburg Stock Exchange.
This press release includes statements that are forward-looking
in nature. Forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause the actual
results, performance or achievements of Capital & Counties
Properties PLC to be materially different from any future results,
performance or achievements expressed or implied by such
forward-looking statements. These forward-looking statements are
made only as at the date of this announcement. Nothing in this
announcement should be construed as a profit forecast. Except as
required by applicable law, Capital & Counties Properties PLC
undertakes no obligation to update the forward-looking statements,
whether as a result of new information, future developments or
otherwise.
This information is provided by RNS, the news service of the
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END
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