Capital & Counties remains confident in the long-term prospects for prime central London

Capital & Counties Properties has released its interim results for the six months ended on the 30^th of June 2021.

“Capco’s actions, commitment and creativity over the past eighteen months have ensured that Covent Garden is the most vibrant district in the West End” comments Chief Executive, Ian Hawksworth.

“We are confident that our approach and the quality of our estate, underpinned by our strong balance sheet, positions Capco for recovery. The elevated level of enquiries, strong transactional activity and improving sentiment indicate that the worst of the pandemic may be behind us. Looking ahead, there are challenges in the near term as the economy moves towards more normal levels of activity however, we remain confident in the resilience of London’s West End and the enduring appeal of Covent Garden”.

Key financials:

• Total equity of £1.7 billion (Dec 2020: £1.8 billion) – EPRA NTA declined by 6% to 199 pence per share (Dec 2020: 212 pence per share).
• Total property value of £1.8 billion, a decrease of 5.1% (like-for-like) (Dec 2020: £1.9 billion.
• Group net debt to gross assets ratio of 28% (Dec 2020: 28 per cent).
• Covent Garden loan-to-value (LTV) ratio of 18% (Dec 2020: 19%).
• Underlying earnings of nil pence per share (June 2020: 0.3 pence per share).
• Reported net rental income £21.0 million (June 2020: £18.2 million).
• Recommended dividend distribution with proposed interim dividend of 0.5 pence per share (June 2020: nil).

Covent Garden portfolio

• Covent Garden total property value of £1.7 billion, like-for-like movement of £85 million or 4.9% since the 31^st of December 2020.
• ERV decreased by 4.3% (like-for-like) to £76 million (Dec 2020: £81 million) while the equivalent yield was stable at 3.94%.

Proactive asset management and strong leasing momentum

• 29 new leases and renewals were agreed during the period representing £6.0 million contracted income (6% below Dec 2020 ERV) with a further £3.1 million under offer.
• Government restrictions have been lifted with retail and hospitality customers fully reopen.
• Growing customer sales recorded through the period with certain premium and luxury categories amongst the highest performing.
• High occupancy with EPRA vacancy at 3.4% (Dec 2020: 3.5%) performing strongly versus central London – 12 new openings scheduled over the course of 2021 including Peloton, Glossier and Ave Mario.
• Improved rent collection: 65% of June quarter collected (adjusted for payment plans).
• Customer support provided in H1 2021 on a case-by-case basis and expected to reduce with easing of restrictions.
• Pedestrianisation of key streets extended; additional al fresco dining providing over 800 covers.
• Six-month cultural programme launched, digital engagement, public art installations, pop-up bars and terraces across the estate.
• Realized value from the sale of two residential-led blocks on Southampton Street for £50 million (before costs).

Net Zero Carbon by 2030 underlining commitment to sustainability

• Environment, Sustainability and Community (“ESC”) Board Committee setting clear actions.
• Detailed pathway to Net Zero Carbon by 2030 to be published later this year.
• Commitment to enhancing air quality with continued pedestrianisation of streets around Piazza 2.
• Customer engagement programme commenced on carbon, water, and waste, intending to reduce environmental impact.
• Partnership with the Wild West End, a charitable partnership which aims to enhance the quality of green space and the local environment.
• Support provided in respect of homelessness.

Strong balance sheet position with significant financial flexibility

• Covent Garden net debt of £304 million (Dec 2020: £352 million) and LTV ratio of 18% (Dec 2020: 19%).
• Group net debt of £668 million (Dec 2020: £710 million) and net debt to gross assets of 28% (Dec 2020: 28%).
• Access to Group liquidity comprising undrawn facilities and cash of £989 million (Dec 2020: £1 billion).
• Capital commitments of £5 million (Dec 2020: £2 million).
• Weighted average maturity on drawn debt of 5.4 years (Dec 2020: 5.4 years) and average cost of debt of 2.8% (Dec 2020: 2.6%).

Other investments:

• Investment in Shaftesbury PLC valued at £552 million (Dec 2020: £552 million), compared with a £501 million cost; dividend income from Shaftesbury PLC shares of £2.3 million received in July 2021.
• Lillie Square property value of £108 million, a decrease of 7.9% (like-for-like) since the 31^st of December 2020. Joint venture loan facility repaid in full during the period.
• Final £15 million of deferred consideration from the Earls Court sale due in November 2021.