Capital & Counties (CapCo) property portfolio consists of two distinct parts; the retail and restaurant district of Covent Garden, and the 70-acre urban residential development project at Earls Court. CapCo are considering a split to become two separately listed companies, after news broke following prolonged speculation the Earls Court land could be sold off after years of struggling to approve building plans.
CapCo are considering to turn Covent Garden, valued at £2.5bn, into a standalone company, enabling the division to focus on prime central London retail. The Earls Court development is currently valued at £759m, where the focus of this division will be on building four urban villages and a high street. The capitals property market has struggled over the past three years. In 2015 the development was valued at £1.4bn, but has since fell victim to the capitals falling house prices and stricter local planning laws about affordable housing. This caused CapCo to knock millions of pounds worth of value off the site, leaving the scheme down 29%. The development has run into many difficulties. Hammersmith & Fulham council originally encouraged the plans in 2014, now the Labour-run council has made moves to regain control of two council estates delegated for demolition under the CapCo plans, after amid concerns over the levels of affordable housing in the area.
Nothing has been set in stone, however, CapCo noted in a statement that Chief Executive Officer, Ian Hawksworth would front the Covent Garden division, meanwhile, Managing Director, Gary Yardley, would run the Earls Court development, if the split proceeds. CapCo also stated that “The Board regularly reviews the structure of the business to ensure it is maximising long-term value creation for shareholders. The Board has taken into account the changing income profile and scale of the Covent Garden business together with the completion of the final phase of demolition at Earls Court, and believes that separation of the two estates into independent businesses would now generate a number of benefits”.
The shopping and leisure district of Covent Garden in London’s West End, is more likely to draw a bid due to its “world class retail destination” title. The Saudi Arabian Olayan Group, Blackstone Group LP and Berkeley Group Holdings Plc, have reportedly made bids for all or part of the company over the past 6 months.
If the separation were to pursue, Covent Garden would be launched as prime central London retail focused REIT (Real Estate Investment Trust) but where does that leave the Earls Court development.
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