SHARE PUNT OF THE WEEK

PRICE: 289.7p

WHAT IS IT? Capital & Counties is one of the largest investment and development property companies specialising in central London. It owns two groups of assets – one focused on Covent Garden and the other on Earls Court. It aimed to regenerate the Covent Garden retail area and has introduced brands from Mulberry to Chanel. But the Earls Court scheme, which is mainly residential, has been described as ‘undeliverable’ by Hammersmith and Fulham council and has faced significant opposition from local campaign groups. Delays have meant the scheme has lost 29pc of its value since 2015.

WHAT’S THE LATEST? The business is currently mulling whether or not to spin off its Covent Garden estates into a separate real estate investment trust. This would be an attempt to boost the value of the two assets, as the Earls Court development is currently dragging the company’s share price down.

WHO BACKS IT? Foord Asset Management, an investment firm with South African roots, holds the largest stake in Capital & Counties. One of the company’s directors, Graeme John Gordon, holds the second largest stake while Blackrock, Norges Bank, Investec, Old Mutual, Vanguard and Legal & General also feature in the top ten shareholders.

WHY YOU SHOULD INVEST The value of the Covent Garden part of the portfolio rose by 4.3pc in value last year, to £2.5bn. That equates to 294p per share, which is higher than the current share price. Russ Mould, investment director at broker AJ Bell, said: ‘That means that Earls Court is effectively thrown in for free, as is any future rental or capital growth on the prized Covent Garden assets.’

...AND WHY YOU SHOULDN’T There is no guarantee that the Earls Court project will not continue to lose value, and the management team may decide not to split the two assets.