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Capital & Counties reports strong leasing momentum

Capital & Counties, the Covent Garden landlord, has reported an uptick in leasing momentum after a difficult two years during the pandemic.

In full year results to the end of December 2021, the group said strong leasing progress in the second half of the year resulted in a like-for-like increase in the value of its Covent Garden estate of 4.6%. Overall, the valuation fell 0.6% for the full year to £1.7bn.

EPRA net tangible assets (NTA) was stable at 212.4p per share (2020: 212.1p), while underlying earnings per share was 0.5p (2020: -0.7p). The group has proposed a final 2021 dividend of 1.0p per share, resulting in a full-year dividend of 1.5p. 

Strong leasing momentum driving rental growth

The group signed 60 new leases and renewals during the year, representing £11m of contracted income – all in line with the previous passing rent. The company said that 2022 had started positively, with a leasing pipeline worth £3.8m of income under offer. The leasing success resulted in a fall in EPRA vacancy during the year to 2.6% (2020: 3.5%).

Overall customer sales for the second half of 2021 were approaching 2019 levels, the group said, with certain categories including premium and luxury outperforming 2019.

Rent collection still lags, however, with 75% received for 2021. It has improved this year, with 92% collected for the first quarter.

Balance sheet

The group has a net debt of £254m held against its Covent Garden assets and a loan to value ratio of 15%. It completed a new £300m unsecured revolving credit facility for Covent Garden during the year, replacing the previous facility which was due to mature in December 2022.

Group net debt is £599m and the group has a net debt to gross assets ratio of 24%. The group has undrawn facilities and cash of £652m. The weighted average maturity on drawn debt is 4.9 years and the average cost of debt of 2.8%.

Chief executive’s outlook

Ian Hawksworth said: “Early action has positioned the business strongly to benefit from recovery. Our successful implementation of leasing, public realm and marketing strategies has delivered the opportunity for growth. Throughout the pandemic our team has worked hard to maintain high occupancy. We are pleased with the levels of leasing activity and improving market indicators which have contributed to a valuation uplift.

“We will look to increase investment across the estate on repositioning opportunities to accelerate value creation. Further to this, we are tracking a number of targeted acquisitions in the surrounding area to expand our ownership. With our strong customer line-up and leasing pipeline, Covent Garden is well-positioned for further rental growth. Whilst there are prevailing economic headwinds, the West End economy is strongly placed to benefit from the continued normalisation of business and consumer activity. 

“Through our long-term vision, entrepreneurial culture and strong balance sheet we have positioned the business for recovery and growth. We look ahead with confidence to continued progress in 2022 and in the long-term prospects of the Covent Garden estate and London’s West End.”

CAPC : Capital & Counties reports strong leasing momentum

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