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Capital & Counties’ portfolio value down by almost a billion as COVID impact bites

Capital & Counties' portfolio value down by almost a billion as COVID impact bites

West End landlord Capital & Counties reported a portfolio value loss of almost a billion pounds during 2020.

The group, which owns huge swathes of Covent Garden, said its property portfolio was valued at £1.9bn at the end of 2020, down 26% on a like-for-like basis from £2.8bn a year previously.

The valuation deficit was reflected in the group’s EPRA net tangible asset (NTA), which fell 28% to 212p (from 293p).

Like most other central London retail-focused landlord, Capital & Counties has been badly affected by the pandemic and lockdowns. Non-essential retail tenants were forced to close for large parts of the year and international tourist numbers plummeted.

The result was a 74% drop in net rental income during the year to £16m, and a 30% like-for-like fall in underlying net rental income to £44m.

The company has provided support to its retail and hospitality tenants, with rental agreements being adjusted case-by-case to include deferrals and turnover-linked arrangements.

Rent collection levels for the final three quarters of 2020 (the most affected by lockdowns) stand at 53%, 45% and 53% for Q2 to Q4 2020. This gave it a collection rate for the whole of 2020 of 62% (the first quarter was unaffected).

For the first quarter of 2021, it has so far collected 47% of rent due.

Acquisition of stake in Shaftesbury

During the year, Capital & Counties bought a significant stake in its rival West End landlord Shaftesbury, investing £501m for a 25.2% shareholding.

It said this represented a “compelling investment and entry point”, which was at an implied value of around £1,200 per square foot. It added the deal was consistent with its strategy to invest in complementary opportunities on or near Covent Garden.

Balance sheet

The company has a relatively low gearing, with group net debt (£710m) to gross assets of 28% and a loan to value (LTV) ratio on the Covent Garden assets (net debt of £352m) of 19%.

It has agreed interest cover covenant waivers with its lenders for 2021 and said it has significant headroom against the LTV covenant position.

The group has access to undrawn debt facilities and cash of £1bn.

The weighted average maturity of its drawn debt is over 5 years and the average cost of debt is 2.6%.

CAPC : Capital & Counties’ portfolio value down by almost a billion as COVID impact bites

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