London real estate firms Shaftesbury and Capital & Counties to merge | Property

West End owners Shaftesbury and Capital & Counties have agreed to merge, creating a property company with a combined £5bn portfolio value in the heart of London.

It will be called Shaftesbury Capital and will contain parts of London’s West End, including Covent Garden, Carnaby Street, Chinatown and Soho. Shaftesbury shareholders will own 53% of the group, while Capital & Counties (Capco) investors will own 43%.

Shaftesbury has welcomed the return of West End crowds in recent months and is expecting a further increase in visitors and spending in central London following the recent opening of the Elizabeth line, formerly known as Crossrail. It returned to profit in the six months through March after the value of its 16-acre property portfolio was boosted by rising rents, and its vacancy rate fell below 5%.

Shaftesbury has so far recovered more than a third of the 27% drop in value suffered during the 18 months to March 31, 2021, when Covid lockdowns turned the West End into a ghost town.

Capco owns 380 leasable units in Covent Garden in 1 million square feet of space, which is home to brands including Apple, Chanel and Tom Ford, with future openings of Peloton and womenswear brand Reformation.

The group’s combined £5 billion portfolio will comprise 670 buildings, mainly wholly owned, with 2.9 million square feet of lettable space, including 2,000 shops, offices and apartments. Retail will account for 35% of portfolio value, hospitality and leisure 34%, offices 17% and residential 14%.

The new company will be led by Capco boss Ian Hawksworth as chief executive and its chief financial officer, Situl Jobanputra, will have the same role in the larger group. Shaftesbury’s chairman, Jonathan Nicholls, will chair it and its chief financial officer, Chris Ward, becomes chief operating officer.

Sign up for the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

Shaftesbury chief executive Brian Bickell, 67, has decided to step down when the deal is completed, a reverse takeover by Shaftesbury’s Capco, after 36 years at the West End owner, including 11 years as chief executive. Capco’s president will also retire.

Norges Bank, which owns 25% of Shaftesbury and 14% of Capo, has backed the deal. It is expected to be completed in the fall once the shareholders have voted on it. Capco has a 25% stake in Shaftesbury.

The deal will generate £12m of cost savings per year in the second full year after completion.

Leave a Comment