Capital & Counties is a considering a demerger that would see its Earls Court residential development and Covent Garden retail estate split out.
Chief investment officer Gary Yardley would take charge of Earl’s Court as a listed development company, while chief executive Ian Hawksworth would lead a Covent Garden estate, which would be converted into a central London retail-focused REIT.
The two sides of the business have seen increasingly divergent performance since the London residential market fell away at the end of 2014.
The value of Earl’s Court, where the master plan allows for 7,500 thousand homes, has steadily declined since 2015, losing 27.9% of its value in all.
In 2017 it saw its value decline by 11.8%, while the value of Covent Garden increased by 4.5%. At December 2017, Covent Garden was worth £2.5bn and Earls Court £759m.
Hawksworth said: “CapCo has achieved significant growth since listing, driving value creation from its two prime central London estates, both of which have positive long-term growth prospects.
“Underpinned by a strong balance sheet, CapCo is well-positioned to support the current capital requirements of both of its prime assets. Against this backdrop, the board believes the time is right to consider the structure of the business in order to realise the potential of these unique assets and enhance shareholder value.”
CapCo said the separation of the two estates would “enhance the flexibility of the two businesses going forward”, and allow investors to buy into both businesses, which have distinct risk and reward profiles and capital requirements.
As a consequence of the demerger, chairman Ian Durant has informed the board of his intention to resign after eight years in the position, recommending that a successor should lead the company through this process. Henry Staunton, currently senior independent director, will replace him from 5 June 2018.
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