Capco has reported that the value of its interest in its Earls Court scheme has dropped to £412m.
This latest valuation at the end of March represents a like-for-like decrease of 10.5% over the three months since the end of December, when its interest was valued at £461m.
Capco said the developer’s margin and total development cost assumptions had been increased in the valuation undertaken by JLL on behalf of its joint venture partner on the scheme, Transport for London, as well as a more conservative view taken on the gross development value of the scheme.
On a pro forma basis, this would reduce Capco’s 31 December 2018 EPRA NAV of 326p by approximately 6p per share, the firm added.
The scheme has been mired in controversy, with Hammersmith & Fulham Council looking into a potential CPO to take back land on the site to deliver affordable housing.
It has been reported that this would include the site of the former Earls Court Exhibition Centre, which sits within the neighbouring borough of Kensington & Chelsea, but is owned by the joint venture between Transport for London and Capco (ECPL), and the Lillie Bridge Depot site that is owned by TfL and which it is looking at decommissioning to allow development on the site to proceed.
The council has also previously stated that it wants Capco to hand back 22 acres of land, on which sit the West Kensington and Gibbs Green Estates, sold to it in 2013, as it believes Capco is incapable of delivering the scheme.
Meanwhile, Capco has been considering a demerger of its business and has also held a number of discussions over proposals for purchasing interests in the Earls Court Masterplan to “establish the value and deliverability of the proposals”.
This includes interest in acquiring Capco’s entire stake in Earls Court and interest from potential occupiers, which could be a way of providing the third party capital Capco requires to start delivering the scheme.
Six months ago it confirmed that it was looking to bring in third party capital to progress the development following months of reports of interest in the site from the likes of Berkeley Homes. Since then Capco has also confirmed interest from CK Asset Holdings, a business within the empire of Hong Kong tycoon Li Ka-shing.
At the time Gary Yardley, managing director and chief investment officer at Capco, said interest from PRS providers and senior living providers, as well as educational establishments, had been received.
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