West End giants to forge Shaftesbury Capital

Shaftesbury and Capco will merge to become Shaftesbury Capital, with a £5bn portfolio stretching from Covent Garden to Carnaby Street. The West End landlords said they had reached an agreement on terms to create a new central London REIT, which will see Shaftesbury shareholders hold 53% of the issued share capital and Capco’s own 47%. Capco chief executive Ian Hawksworth, who will become chief executive of Shaftesbury Capital, said the merger was “an exciting opportunity to bring together two exceptional property portfolios in London’s vibrant and thriving West End”. He said: “By combining the creativity and knowledge of our talented and experienced management teams to deliver sustained income and value growth, Shaftesbury Capital aims to become a leading central London mixed-use REIT.” Jonathan Nicholls, chairman of Shaftesbury and soon to be non-executive chairman of the new REIT, said: “The merger of Shaftesbury and Capco unites two complementary and adjacent real estate portfolios under single ownership. Shaftesbury Capital will own a first-class portfolio in some of the most iconic destinations across London’s vibrant West End.” However, shareholder Royal London Asset Management was quick to voice its opposition to the deal. RLAM, which holds 3% in Shaftesbury, said it undervalued the REIT. Mike Fox, head of sustainable investments at Royal London Asset Management, said: “The terms announced today are unattractive and fail to reflect the inherent value of the Shaftesbury estate. It is unclear why it is in the interests of Shaftesbury shareholders to accept them.” Shaftesbury Capital will have an estimated EPRA NTA of approximately £3.8bn, and EPRA NTA per share of approximately 207p, based on 31 March 2022 figures. But the REITs pointed out there was significant potential to increase revenue, as annualised gross income currently stands at £165.5m while estimated rental value is approximately £218m. The combined group is also expected to have around £500m of available liquidity immediately following completion. Once the deal is sealed, Shaftesbury Capital’s portfolio will comprise approximately £1.7bn of retail space, accounting for 35% of the portfolio, and a similar amount of hospitality and leisure space. The remaining 31%, or £1.6bn, will be split between 14% residential and 17% offices. Joining Jonathan Nicholls and Ian Hawksworth in leading Shaftesbury Capital will be Situl Jobanputra as chief financial officer and Chris Ward as chief operating officer. Retiring Capco chairman Henry Staunton said: “I have every confidence in the ability of the combined management and board of Shaftesbury Capital to deliver sustainable value growth for shareholders and benefits for broader stakeholders from its unique portfolio of properties.” Nicholls offered his thanks to the people who helped the two companies reach this point, but would not be joining the new board. “I would like to thank Brian Bickell, Simon Quayle and Tom Welton for their truly extraordinary commitment to Shaftesbury over many decades. Their contribution to its success has been beyond measure, and they will be leaving the business in a strong position for their successors.” Shaftesbury chief executive Brian Bickell said: “Over the past 36 years, Shaftesbury has built a portfolio of the highest quality, and it has been an honour to lead the company as chief executive for the past 11 years.”   To send feedback, e-mail piers.wehner@eg.co.uk or tweet @PiersWehner or @EGPropertyNews Explore take-up, rental trends and the biggest deals in the West End market >> Image © Shaftesbury Capital