UK retail mega-landlord Shaftesbury Capital responded to speculation about its intentions in London’s Covent Garden late Wednesday confirming that it was in talks on a link-up with a major investor, but that it might not happen. Then on Thursday it said the deal was done!
The property giant, which also owns vast tracts of London’s wider West End, said it 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 Capital has exchanged contracts for the sale of a 25% non-controlling interest in the Covent Garden estate to NBIM. The Transaction values the Covent Garden estate at £2.7 billion, in line with its independent property valuation as at 31 December 2024, with expected gross cash proceeds of approximately £570 million.
Completion of the Transaction is expected to take place in early April.
The company said Covent Garden “is a world-class global destination in the heart of the West End of London, centred around the iconic Piazza, the Market Building and surrounding streets, together with Seven Dials. It is a mixed-use portfolio of assets, with 74% of the property value represented by retail and food & beverage and 26% by office and residential. The estate is a vibrant, high-footfall destination, which provides a seven-days-a-week trading environment and exposure to a diverse customer base which has proven to be resilient throughout economic cycles”.
The portfolio has a net initial yield of 3.6%, annualised gross income of £104 million and an estimated rental value (ERV) of £134 million. It covers 220 buildings and over 850 units, across 1.4 million square feet (excluding 0.1 million square feet of long-leasehold residential interests).
The board said its thinking in doing the deal is that it “will provide a number of strategic and financial benefits”. These will include “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”.
It also “positions the business for enhanced investment and expansion opportunities both within the partnership and the broader group, adding to its growth prospects”.
The deal will also strengthen its balance sheet and offer 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”.
CEO Ian Hawksworth said: “This investment by a leading global real estate investor demonstrates the quality of our portfolio. This partnership brings together two long-term investors who have a shared confidence in and ambitions for the growth prospects of the Covent Garden estate and the West End.
“Through partnering with private capital, this transaction leverages our operating expertise and assets, enhancing growth and expansion opportunities across our portfolio whilst strengthening our financial position and providing significant optionality to the Group.
“As demonstrated by our recent 2024 results, Shaftesbury Capital’s portfolio is anticipated to deliver long-term sustained income and value growth. Backed by a strong balance sheet, we are well-positioned to capitalise on market opportunities in London’s West End.”
It’s a major development for the London stock exchange-listed business that has a market value based on its share price of £2.41 billion, lower than the value of one chunk of its property holdings.
The company was formed exactly two years ago as West End landlord Shaftesbury and Covent Garden landlord Capco merged.
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