JSE-listed Capital & Counties (Capco), which owns the retail jewel, Covent Garden, is set to merge with Shaftesbury, the owner of Chinatown, to create a property owner focused on the West End of London with £5bn worth of assets.
CEO of Capco, Ian Hawksworth, said the combined entity which will be called Shaftesbury Capital will be attractive to investors as it will be highly liquid and will own assets which have performed well in testing times, including during the pandemic. While the West End was deserted by the public during the economic lockdowns in the UK, property prices managed to recover much of their value very quickly.
It will own Covent Garden, Carnaby Street, Chinatown and Soho. In terms of the merger scheme, shareholders will receive 3.356 new Capco shares for each Shaftesbury share held. Capco already holds 96 971 003 Shaftesbury shares or 25.2% that company’s issued share capital. After the merger, Shaftesbury shareholders will effectively own 53% of the group while Capco investors will own 47%. Hawksworth will lead the combined entity.
“The proposed merger is an exciting opportunity to bring together two exceptional property portfolios in London’s vibrant and thriving West End. By combining the creativity and knowledge of our talented and experienced management teams to deliver sustained income and value growth Shaftesbury Capital aims to become a leading central London mixed-use Real Estate Investment Trust. I am very much looking forward to working with my new and existing colleagues as we continue to curate wonderful places and experiences for our occupiers, visitors, local workers, and residents in the heart of one of the world’s greatest cities,” said Hawksworth.
He said crowds had returned to the West End in recent months and he expected a further rise in visitors and spending in central London, following the recent opening of the Elizabeth line, formerly known as Crossrail. Tourism was also improving as the UK entered summer and people worldwide began to go on holidays which had previously been on hold amid the pandemic. Shaftesbury swung back to profit in the six months to March after rising rents enhanced the value of its 16-acre property portfolio, and its vacancy rate fell below 5%.
Meanwhile Capco’s retail and supporting residential spaces were performing well. Capco now owns 380 lettable units at Covent Garden across 1-million square feet of space.
Shaftesbury Capital’s portfolio will include 670 buildings with 2.9-million square feet of lettable space. Retail will account for 35% of the portfolio’s value, hospitality and leisure will account for 34%, offices for 17% and residential for 14%.