Capital & Counties Properties PLC (Capco) is one of the largest listed property companies in central London. Its key assets are the Covent Garden and Earls Court estates. Capco share prices and Capco shareholders enjoy growing value through a combination of asset management, strategic investment and selective development strategies.

Capital and Counties is a London based property company that was established in 1933. It is listed in South Africa on the Johannesburg Stock Exchange as an external company, and was listed in 2010.

The company was demerged from Liberty International (now renamed Intu Properties) in May 2010.

The stock has been a favourite of South African investors with a history of offshore markets and hard currency earnings.

The company’s flagship property asset Covent Garden is a strong buy and mixed-use precinct in central London. Since taking sole control of Covent Garden in 2010, Capco has repositioned its portfolio to include high-end purchase retailers such as Ben Sherman and Chanel as well as casual and fine-dining restaurants.

The firm’s three principal businesses are Covent Garden, EC&O Limited (a subsidiary which owns the Olympia and Earls Court venues) and Great Capital Partnership (a 50-50 joint venture with Great Portland Estates which invests in commercial property in the Regent Street and Piccadilly areas).

The market value of the company’s property portfolio as at 31 December 2016 was £3.8 billion

Capco’s growth driving philosophy is widely summarised as “driving long term value creation with responsible oversight.”

The Covent Garden team continues to focus on achieving rental growth through for Capco shareholders and its share price through creative asset management, strategic investment and place making.

2016 was a year of history at Earls Court. The demolition to ground level of the former Exhibition Centres was completed during the year and land enablement works are now underway preparing the site for future development. The first residential completions at Lillie Square took place at the end of 2016 with the first units being handed over in time for Christmas.

The Venues business continues to strengthen with a reliable and growing income stream reflecting its excellent prospects as a central London venue.

The Board is committed to encouraging diversity and the development of its people across the business.

The Board and Directors regularly visit Capco’s assets and see for themselves the transformations that take place. This and the regular briefings Capco receives from operational management helps the company gain a real understanding of the business challenges and opportunities.

The delivery of Capco’s strategy is underpinned by comprehensive policies designed to ensure that the business plan is delivered in line with the Board’s expectations and forecasts.

Capco’s disciplined approach to capital allocation has meant Capco is in a financial position with a low loan to value of 23 per cent.

Capco’s strategy remains clear and focused on driving long-term value creation from its two unique central London estates. London is a growing and global city and Capco’s two estates are well placed for long-term success

Capco regularly considers opportunities where its core skills of place-making and master planning can be utilised and in 2015 acquired a 50 per cent interest in the Solum Developments joint venture with Network Rail which is exploring potential opportunities for future redevelopments at significant railway station sites across London.

2016 has been a challenging year for Capco shareholders and the Capco share price but despite this, Covent Garden has continued to deliver excellent growth and is now established as one of the best retail estates in the world.

The success of Capco’s investment strategy at Covent Garden was not enough to offset the decline in land value at Earls Court, which was affected negatively by the outcome of the EU Referendum. As a result, EPRA net asset value fell by 5.9 per cent over the year to 340 pence per share with 4.7 per cent of this occurring in the first six months of 2016.

The balance sheet has been further strengthened by the financing activities across the Group this year resulting in high liquidity of £556 million, an extension of its loan maturities to 5.9 years and a lower average cost of debt of 2.7 per cent.

The total property value of the Group declined 4.4 per cent on live and online trade platforms(like-for-like) in the year to 31 December 2016 to £3.7 billion.

The December 2016 valuations incorporate the 1 per cent increase in Stamp Duty Land Tax (“SDLT”) that was enacted 2016, which was applicable to most of Capco’s portfolio and had an impact of £32.4 million (0.9 per cent of property value).

The valuation of Covent Garden has risen by 6.4 per cent (like-forlike) to £2.3 billion, driven by ERV growth of 7.9 per cent achieved over the year. The equivalent yield is 3.5 per cent, reflecting the valuers’ current view of the strength of demand for central London retail investments.

The valuation of Earls Court Properties is £1.1 billion, a recent history decrease of 20.4 per cent (like-for-like) driven mainly by a greater risk premium through a higher developer’s margin for consented development land, trimming of sales values, as well as some cost inflation.

This reflects the estimator’s data assessment of weakened sentiment and a correction in the central London residential market. Arguably, the biggest concern for Capco up to today as a property company is the impact a Brexit might have on other European regions. There is already a wide call for a referendum in other EU member states which might lead to a large scale break-up of the bloc.

Capital & Counties, has cut the value of its Earls Court development by 14 per cent in a further sign that the value of central London luxury property is falling following UK’s vote to leave the EU.

The developer said the valuation of the site stands at £1.2 billion, a performance down of £1.4 billion in December 2015. This means that Brexit has wiped as much as £200 million off the development’s stock value and shareholders dividends.

Real Estate

Real Estate

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