Placing to fund Covent Garden
CAPITAL & Counties Properties (Capco), one of the two listed independent companies formed from the demerger of Liberty International, has about £149.1 million (R2 billion) through a share placement to fund expansion opportunities at Covent Garden.
The placing involved 68.4 million new ordinary shares of 25p each in Capco, which represented about 9.99 percent of the company’s issued share capital immediately prior to the placing.
The sterling shares were placed at a price of £2.18 each and the rand shares at R29.21 each, Capco said yesterday.
Capco expected the acquisition and projects at Covent Garden, which will be funded with the proceeds of the placing, would accelerate its Covent Garden strategy and be accretive to both estimated rental values and net asset value a share over time.
Liberty International, the former listed UK regional shopping centre industry leader founded by Donald Gordon, acquired a 2.8ha prime retail location in iconic Covent Garden in central London for £421m cash in August 2006.
The demerger of Liberty International in May 2010 resulted in the creation of two focused and separately listed entities: Capco, a Londonfocused property entity that owns the Covent Garden site; and Capital Shopping Centres Group, Liberty’s former shopping centre business.
Capco said its strategy for the creative regeneration of Covent Garden remained on a strong positive trajectory.
It said since Liberty International’s demerger, significant shareholder value had been created, with the estate valuation growing from £548m in December 2009 to £856m in June this year.
Capco’s board believed there were additional opportunities in Covent Garden over the next 12 to 18 months to commit significant incremental capital of about £200m from existing resources and the proceeds of this placing to generate further growth in the estate.
The estimated rental value was therefore being increased to between £60m and £65m by the end of 2015, which would support an estate valuation at current yields approaching £1.3 billion over this three-year timeframe as estimated rental values were translated into passing rent.
Capco said these opportunities included growing the estate further through acquisitions to strengthen Capco’s presence across the area; expanding the luxury and food and dining offers; and repositioning assets towards higher value uses by, in particular, converting upper floors currently used for offices to residential usage.
It expected to complete acquisitions of more than £50m this year.
Of this, £18m had been completed already, a further £24m was expected to be completed in the next month and it has a large pipeline of further acquisitions.
Capco said identified projects would require about £30m of capital expenditure over the next 12 to 18 months.
The shares fell 0.37 percent to R29.50 on the JSE yesterday.