SENS: Capital & Counties Annual Results for the year ended 31/12/2017


Key financials:

  • Equity attributable to owners of the Parent £2.8 billion (2016: £2.8 billion).
  • EPRA NAV 334 pence per share, a decrease of 1.7 per cent (2016: 340 pence per share).
  • Total property value £3.5 billion, a decrease of 0.9 per cent (like-for-like) (2016: £3.7 billion).
  • Underlying EPS 1.3 pence per share (2016: 1.4 pence per share).
  • Proposed final 2017 dividend of 1.0 pence per share resulting in a full-year dividend of 1.5 pence per share.

Another strong year at Covent Garden:

  • Total property value of £2.5 billion, an increase of 4.3 per cent (like-for-like) (2016: £2.3 billion).
  • Net rental income up 11.3 per cent like-for-like or 17.8 per cent in total to £48.9 million (2016: £41.5 million).
  • 90 new leases and renewals transacted representing £14.6 million of income at 10.4 per cent above 31 December 2016 ERV.
  • ERV increased by 4.6 per cent (like-for-like) to £105 million (2016: £96 million); progress towards ERV target of £125 million by December 2020.
  • £99 million invested in strategic acquisitions expanding ownership of the estate.

Operational progress at Earls Court:

  • Earls Court interests valued at £1.0 billion in total, a decrease of 11.8 per cent (like-for-like) (2016: £1.1 billion).
  • Completion of complex demolition works on ECPL land in preparation for future development.
  • Lillie Square Phase 1 substantially handed over and 50 per cent of Phase 2 reserved or exchanged.

Sale of Venues:

  • Sale of Venues at a slight premium to net asset value, realising £230 million net proceeds for deployment in prime central London estates.

Strong financial position with significant financial flexibility:

  • Group loan to value ratio 21 per cent (2016: 23 per cent) with substantial headroom across all covenants.
  • £225 million Private Placement completed and £705 million Covent Garden bank facility extended to 2022.
  • Cash and available facilities of £691 million (2016: £556 million).
  • Modest capital commitments of £61 million (2016: £157 million).
  • Weighted average maturity extended to 6.9 years (2016: 5.9 years).
  • Weighted average cost of debt of 2.8 per cent (2016: 2.7 per cent).

Ian Durant, Chairman of Capco, commented:

Both of our central London estates had a very active year in which Capco made good operational progress. The Covent Garden estate which now represents over 70 per cent of property value, delivered strong performance and value growth. Economic and political uncertainty has impacted the London residential market, resulting in a decline in the valuation of our Earls Court interests“.

Capco’s strategy remains clear and focused on delivering long-term value for shareholders from our two prime central London estates, backed by a strong balance sheet.

Ian Hawksworth, Chief Executive of Capco, commented:

Covent Garden, now valued at over £2.5 billion, delivered another strong year of rental and value growth. Positive leasing demand for our world-class retail and dining destination continues, with 90 leasing transactions securing a record £15 million of rental income at a premium of 10 per cent to December 2016 ERV. Our creative asset management strategy and investment into the estate have produced a high quality and vibrant environment for the consumer, driving growth of 18 per cent in rental income. ERV increased to £105 million, demonstrating progress towards the target of £125 million by December 2020“.

The Earls Court Masterplan is one of the most important mixed-use development opportunities in London, with the potential to create a new district, delivering homes, jobs and investment at scale. This strategic scheme has a planning consent in place, existing transport infrastructure and the ability to grow with the needs of London. Whilst political and macroeconomic conditions have impacted the residential market resulting in a further valuation decline, a number of operational milestones have been achieved and as a long-term investor, Capco will continue to engage with partners and stakeholders to evolve and bring forward the Masterplan“.

The successful sale of Venues and financing activities undertaken during the year have further enhanced Capco’s strong financial position. With low leverage and high liquidity, Capco is well-positioned to deliver long term value creation from its two prime central London estates and to take advantage of opportunities as they arise.