Interim Management Statement

RNS Number : 4929Q

Capital & Counties Properties Plc

07 November 2012

 



7 November 2012

CAPITAL & COUNTIES PROPERTIES PLC ("CAPCO")

INTERIM MANAGEMENT STATEMENT

FOR THE PERIOD 1 JULY TO 7 NOVEMBER 2012

Ian Hawksworth, Chief Executive of Capital & Counties Properties PLC, commented:

"The year to date has been one of further momentum as we continue to make progress on our strategy. The Covent Garden estate is performing well with the scope for further value to be unlocked through continued investment in the district, expansion of the portfolio through acquisitions and new retailer and restaurant lettings. Key milestones have been reached for the Earls Court Masterplan, including LBHF's positive planning decision announced in September, and we look forward to reporting further progress at the year-end results."

Further expansion of Covent Garden

·     ERV target for Covent Garden increased to £60-65 million by the end of 2015

·     £149 million equity placing in September 2012 to fund further growth activity in Covent Garden

·     Over £60 million invested in Covent Garden during the period through new acquisitions on Wellington Street, Floral Street and Henrietta Street

Significant milestones reached at Earls Court

·     Resolution to grant consent given by LBHF for the Earls Court Masterplan outline planning application, RBKC planning committee due 20 November 2012

·     LBHF voted to enter into the Conditional Land Sale Agreement to include its land in the redevelopment

·     Completion of the joint venture agreement for Seagrave Road releasing cash proceeds of £68 million to Capco

Financial position and capital recycling

·     Disposal of £116 million (Capco share) of mature assets from The Great Capital Partnership

·     Cash balances and available facilities of £458 million as at 30 September 2012

·     Pro forma debt to assets ratio of 9 per cent

A conference call for analysts and investors is being held today at 8:30am UK time.

Enquiries

Capital & Counties Properties PLC

Ian Hawksworth                               Chief Executive                                  [phone]

Soumen Das                                       Finance Director                                [phone]

Public relations

UK: Michael Sandler/Wendy Baker, Hudson Sandler                         [phone]

SA: Nicholas Williams/Morne Reinders, College Hill Associates  [phone]

Covent Garden

Covent Garden continues its transformation. In September an equity placing raised £149 million of gross proceeds to invest further in the growth strategy for the district. The ERV target has been extended to £60-65 million by the end of 2015.

Acquisitions: Since July, over £60 million has been invested in Covent Garden through new acquisitions. On 5 November, the purchase of the Wellington Portfolio for £43 million was completed, which includes three properties on the corner of Wellington and Tavistock Street. The three buildings comprise 52,700 sq ft of restaurant, office and retail space and offer significant opportunity for asset management and potential redevelopment. Other recent acquisitions include the purchase of 14 Garrick Street in July; and the purchase of six retail units on Henrietta Street and Floral Street in October.

Leasing activity: Covent Garden has seen an active year with 45 leasing transactions representing £6.4 million of rental income to the end of September, with new lettings at 7.6 per cent above ERV at the point of lease activity. There were fewer new transactions over the Olympics period, with four new lettings signed at 0.2 per cent above ERV, but the autumn has been busier and a number of new lettings are expected to complete before year-end. The EPRA adjusted occupancy rate for the estate is 99.7 per cent and footfall remains consistent at 44 million on a 12 month rolling basis.

Retail: July saw the opening of fashion retailer Opening Ceremony's first pop-up store in the UK and in October the brand relocated to its permanent home at 35 King Street. King Street, the home of contemporary luxury in the West End, will also welcome high-end retailer Twenty8Twelve at 15 King Street in 2013 and Hackett House, the new concept from menswear brand Hackett will open at 37 King Street this winter. Luxury retailer Chanel launched a pop-up boutique in the Market Building in July with a bespoke fragrance and beauty concept and will be trading through Christmas. Ralph Lauren has recently announced that it will be closing its Rugby brand globally in January 2013. The Rugby unit on King Street, adjacent to the Apple store and Burberry Brit, is let to Ralph Lauren with the first break option in 2021.

Food & dining: Keith McNally's Balthazar and Balthazar Bakery are expected to open in early 2013 and will join Jamie Oliver's new British concept with Chris Bianco, Jamie's Union Jacks, which opened in the North Hall of the Market Building in July 2012. Also new to the Market Building is premium chocolatier Venchi which opened its first UK store in July serving artisan chocolates and gelato.

Residential: Contracts were exchanged for the sale of a second flat in The Henrietta in October for over £4 million continuing to set a strong pricing tone for the area. Work on the second office to residential conversion, The Russell, to create five new luxury apartments overlooking the Piazza, is on track to complete in Q1 2013. Renovation at The Beecham will start early next year to create further high-quality apartments on the upper floors and a new retail or restaurant concept on the ground and lower ground floors.

Developments: Plans for a larger scale mixed-use development centred around Kings Court are being considered to drive further value in the district particularly around King Street and Floral Street. It is intended that a planning application for the scheme will be submitted during H1 2013.

Earls Court Masterplan

Significant progress continues on the Earls Court Masterplan to implement Sir Terry Farrell's vision for 'Four Urban Villages and a 21^st Century High Street' on the Earls Court & West Kensington Opportunity Area ("ECOA"). On 12 September, the London Borough of Hammersmith & Fulham ("LBHF") approved a resolution to grant consent for the outline Earls Court Masterplan application. The Royal Borough of Kensington & Chelsea ("RBKC") is due to consider the application on 20 November 2012. Negotiations continue on the Section 106 agreement which will deal with the detailed implementation requirements and associated community benefits of the Masterplan, and the final documentation is expected to be completed in 2013.

Following the publication of the draft terms in April, LBHF voted in favour of entering into the Conditional Land Sale Agreement ("CLSA") to include its land in the redevelopment which includes the West Kensington and Gibbs Green estates. The principal terms of the CLSA remain in line with those previously indicated. The documentation is being finalised and is expected to be signed shortly.

The application for judicial review that was received by LBHF and RBKC regarding the Supplementary Planning Document for the ECOA has now been granted a hearing and is expected to be heard in the High Court in 2013. Capco has been notified as an interested party.

Discussions continue with Transport for London ("TfL") on the Earls Court lease regear and TfL's land within the Earls Court Masterplan.

Seagrave Road

The joint venture agreement with the Kwok Family Interests relating to the Seagrave Road site completed on 30 August, with Capco receiving cash consideration of £68 million. Design work continues on the implementation of the detailed planning consent received in March 2012 to create 808 new homes and a new garden square, with work on site due to commence during 2013.

EC&O Venues

The EC&O Venues business continues to perform in line with expectations, with 57 per cent of budgeted business already contracted for 2013. Earls Court successfully hosted the Olympic volleyball tournament this summer welcoming over half a million visitors into the venue over the two week period.

In October at an industry awards event, Olympia was recognised with a high commendation in the category of Exhibition Venue of the Year. Olympia's Grand Hall welcomed the Great British Beer Festival back for the first time since 2005, securing a record 47,530 visitors during the festival.

Improvement works of £9 million to Olympia Two completed in September on time and on budget. The new West Hall, completed in December 2011, has welcomed a variety of shows including Colours of Beijing.

The Great Capital Partnership & China

The strategy to dispose of mature assets in The Great Capital Partnership ("GCP") and recycle capital back into the core business continued with the sales of 100 Regent Street and Regent Arcade House in September releasing £56 million (Capco share). This followed the sale of the Jermyn Street Estate in July for £60 million (Capco share).

The final asset in China has been contracted for sale and cash proceeds in line with the June market value of £5 million are expected to be received by year-end.

Financial position

As at 30 September 2012 following the equity raising, completion of the Seagrave Road joint venture and sales within GCP:

·     Gross debt for the Group was £380 million (30 June: £450 million) and net debt was £139 million (30 June: £397 million)

·     Based on 30 June property values, the pro forma debt to asset ratio was 9 per cent (30 June: 24 per cent)

·     Cash balance of £242 million and available facilities of £216 million providing liquidity of £458 million (30 June: £248 million)

·     Weighted average maturity of the Group's available debt facilities was 4.8 years (30 June: 4.5 years)

·     Average cost of drawn debt, excluding fees on undrawn amounts, was 5 per cent (30 June: 5 per cent), with 100 per cent of the debt interest rate protected (30 June: 100 per cent).

As at 30 September 2012 Capco had capital commitments of £13.5 million.

- ENDS -

This announcement includes statements that are forward-looking in nature. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Capital & Counties Properties PLC to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Any information contained in this announcement on the price at which shares or other securities in Capital & Counties Properties PLC have been bought or sold in the past, or on the yield on such shares or other securities, should not be relied upon as a guide to future performance.

About Capital & Counties Properties PLC (Capco)

CAPITAL & COUNTIES PROPERTIES PLC is one of the largest companies that specialises in central London real estate and is a constituent of the FTSE-250 Index. CAPITAL & COUNTIES PROPERTIES PLC holds 3.0 million square feet of assets valued at £1.6 billion (as at 30 June 2012) in three landmark London estates: Covent Garden, which has assets valued at £856 million, including the historic Market Building; Earls Court & Olympia Group and 50% of the Empress State building in Earls Court amounting to aggregate property assets of £620 million; and the Great Capital Partnership, a joint venture with Great Portland Estates, which holds prime West End properties of which Capco's share is £159 million. The company is listed on the London Stock Exchange and the JSE, Johannesburg.

www.capitalandcounties.com

 

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