The bosses of Capital & Counties and Shaftesbury have both hailed the “resilience” of their West End portfolios as the finalisation of their merger nears.
In separate trading updates published this morning, the two companies revealed falling portfolio valuations but said footfall and leasing interest were strong despite macroeconomic headwinds. The two expect their merger to complete early next year.
In Capco’s trading update, covering the period from 30 June to 31 October, the company said it had agreed 35 new leases and renewals representing £3m of income, with a further £2m of rent under offer or negotiation.
The valuation of its Covent Garden portfolio stood at £1.78bn as of the end of September, down by 2% on the end of June and 25% lower than in December 2019, before the onset of the Covid-19 pandemic.
Chief executive Ian Hawksworth said: “Trading activity at Covent Garden remains resilient with strong leasing demand across all uses, and positive footfall and sales metrics. The volatile macroeconomic environment is having an impact on asset valuations, however we are encouraged to continue to see rental growth in our portfolio…
“Although the broader economic outlook is uncertain, we are well positioned with a strong balance sheet and are confident in the long-term resilience of and prospects for the West End.”
The company has access to £421m split between cash of £121m and £300m of undrawn credit facilities, the latter of which has been extended by a year to September 2025.
The value of its holding in Shaftesbury stood at £357m, down from £506m at the end of June.
At Shaftesbury, the portfolio valuation has fallen by 3.6% since the end of March, to £3.2bn – as in the case of Capco, the company pinned the drop on yields moving out, partly offset by ERV growth.
The company said leasing activity “remains good” and that over the six months to the end of September it concluded commercial lettings, renewals and rent reviews worth £15.8m and residential lettings totalling £6.2m.
Chief executive Brian Bickell said: “The West End has enjoyed its first summer of trading unaffected by Covid restrictions since 2019, with strong domestic footfall and a rebound in international visitor numbers, which have continued into the first weeks of autumn…
“Valuers have reported an outward shift in commercial valuation yields, due to the impact on investment market sentiment of globally-rising finance rates and the deterioration in the macroeconomic outlook. This has been partially offset by the continuing strong operational performance of our portfolio which reflects its exceptional qualities, appeal and long-term resilience.”
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