Capital & Counties has delivered a 22% hike in net asset value to 249p a share, reflecting 20% surge in property values.
The company’s two central London estates, Covent Garden and Earls Court, were valued at £2.3bn at the end of 2013, up from £1.7bn the previous year.
The portfolio delivered a 23% total return for the year.
Capco’s LTV was 15% at December 2012, up from 10%.
It had cash and available facilities of £287m, compared with £401m in 2012, and had agreed a new £665m unsecured revolving credit facility for Covent Garden.
A proposed final 2013 dividend of 1p per share will contribute to a full-year dividend of 1.5p a share
Looking at Covent Garden, Capco said its holdings rose 19% in value to £1.2bn, with an 11% rise in estimated rental value to £58m.
The firm has now revised its ERV target to £75m by December 2016.
During the period new leases and renewals were agreed 11.6% above December 2012 ERV.
It signed 12 new retailers and restaurants, including Dior Beauty, Burberry Beauty Box and Shake Shack.
The firm has also won resolutions to grant planning consent for its first major scheme at Covent Garden, the 90,000 sq ft Kings Court and Carriage Hall developments.
In west London at Earls Court, its interests rose in value by 25% to £934m after winning outline planning consent for the 10.1m sq ft residential-led, mixed-use Earls Court masterplan.
It also submitted detailed planning for Earls Court Village and is progressing the design of the scheme from the outline planning consent.
Capco got Transport for London board approval in February 2014 for a proposed joint venture in respect of the development of sites known as EC1 and EC2, to which TfL owns the freehold and Capco is the leaseholder.
In its results it gives details of this partnership, in which ownership is split 63% to Capco and 37% to TfL, reflecting “the value created by combining both organisations’ respective freehold and leasehold interests”.
It said no cash consideration will be payable by either party to establish the joint entity, which will own new 999-year leases for the sites, as well as the Northern Access Road and the air rights over the West London Line.
Capco is to be the business manager of the joint entity, which will enable a comprehensive approach to be taken for the implementation of the Earls Court masterplan for the wider Earls Court and West Kensington Opportunity Area.
It said that it has commenced preparation has commenced “to meet the operational and governance requirements of this role”.
At this stage, no agreement is in place regarding the Lillie Bridge Depot, however TfL has stated it will form part of the Earls Court masterplan if and when it is operationally feasible to do so.
It also updated on an agreement with Network Rail which was completed in March regarding the air rights above the West London Line.
As part of the agreement, Capco has secured a new 999-year lease to replace the existing lease in respect of the Earls Court 2 site for an initial consideration of £5.3m.
Under the terms of the agreement, Capco can exercise options for a period of 50 years for further 999-year leases of the remainder of the West London Line to allow for development of the Lost River Park within the Earls Court masterplan.
Network Rail is entitled to further payments of 5.55% of the residual land value which will be payable by Capco at the time development or disposal of each phase of the Earls Court masterplan is initiated.
A further update was provided on an option exercised in November under the conditional land sale agreement, which it entered into with London Borough of Hammersmith and Fulham in January 2013 in relation to LBHF’s land within the redevelopment area.
The CLSA was approved by the secretary of state for communities and local government in April and comprises approximately 22 acres including the West Kensington and Gibbs Green estates.
The land relating to the estates is not currently recognised within these financial statements as the timing and phasing of the land draw down remains subject to a detailed process.
No phase can be transferred unless replacement homes for the residents of the relevant phase have been provided and vacant possession is given of the phase. With the option exercised and with the outline planning consent granted, Capco is working closely with LBHF under the detailed mechanisms within the CLSA to identify the requirements for the first tranche of replacement homes which would enable vacant possession of the first phase of land to be provided.
Of the total cash consideration of £105m, £15m was originally paid for the exclusivity agreement and is now held as a prepayment against a future draw down of the land; while the properties acquired in 2013, at the time of signing the CLSA, are accounted for as investment properties and accordingly were revalued at 31 December 2013.
Following exercise of the CLSA in November, the group has become committed to the payment of the residual £75m due under the agreement.
The £75m is expected to be paid in five annual instalments of £15m starting on 31 December 2015, which are independent of the land draw down process.
On its 1m sq ft Lillie Square joint venture residential scheme its share was valued at £153m – up 31% – and it is preparing to launch the first phase of a total of more than 800 new homes.
It is partnering with the Kwok family interests on the 7.5-acre scheme to deliver 608 private and 200 affordable homes.
Looking ahead, it said the priority for the Empress State building – which it owns outright after buying in 50% for £117m in August – is to obtain approval for the detailed residential application that was submitted in late 2013.
Chairman Ian Durant said: “This was another year of significant performance for Capco. Our focus on London and our strong financial position will enable us to build on the momentum and continue to deliver market-leading total returns for our shareholders from both our landmark estates.”
Chief Executive Ian Hawksworth said: “Our strategy is clear and focused. The creative place-making strategy at Covent Garden has established the estate as a world-class retail and dining destination.
“At Earls Court, a number of major planning and land assembly milestones, including the receipt of outline planning consent for the masterplan, have enabled us to drive further momentum as we progress this exciting scheme.”
bridget.o’connell@estatesgazette.com
