Shaftesbury Capital has formed a strategic, long-term partnership with Norges Bank Investment Management (NBIM), the Norwegian sovereign wealth fund, in respect of its Covent Garden estate. Shaftesbury is selling a 25% non-controlling interest in the Covent Garden estate to NBIM. This values the Covent Garden estate at £2.7bn, in line with its independent property valuation as at 31 December 2024 (adjusted for a small asset acquisition post year-end), with expected gross cash proceeds of approximately £570m. Completion is expected to take place in early April 2025.
The portfolio has a net initial yield of 3.6%, annualised gross income of £104m and an estimated rental value (ERV) of £134m as at 31 December 2024. The portfolio covers some 220 buildings and over 850 units, across 1.4m square feet (excluding 0.1m square feet of long-leasehold residential interests).
Benefits of the transaction
The board believes that the deal provides a number of strategic and financial benefits, including:
- Creation of a strategic partnership with a leading global investor with a long-term investment horizon and knowledge of and established presence in London’s West End;
- Positions the business for enhanced investment and expansion opportunities both within the Partnership and the broader Group, adding to its growth prospects;
- Substantial cash investment by NBIM;
- The transaction is expected to be earnings-enhancing and neutral to 2024 EPRA net tangible assets per share. Shaftesbury Capital will retain control and management of the Covent Garden estate, with fee income from the Partnership reflecting the running costs of managing the estate; and
- Strengthened balance sheet and enhanced financial flexibility across the Group, with a range of options to deploy the proceeds, including acquisitions, investment into the existing Shaftesbury Capital portfolio and reduction of net debt.
Proceeds will be used initially to reduce drawn debt, in particular partial repayment of the Canada Life term loan (£67.4m of the £135m, which will utilise approximately £42m of the proceeds net of restricted cash), and in due course repayment of the £275m of exchangeable bonds due in March 2026. In the meantime, cash will be held on deposit until deployed.
SHB : Shaftesbury ties up with Norges Bank in Covent Garden
