Interim Management Statement

RNS Number : 9275D

Capital & Counties Properties Plc

03 May 2013

 



3 May 2013

CAPITAL & COUNTIES PROPERTIES PLC ("CAPCO")

INTERIM MANAGEMENT STATEMENT

FOR THE PERIOD 1 JANUARY TO 3 MAY 2013

Ian Hawksworth, Chief Executive of Capital & Counties Properties PLC, commented: "Capco has had an active start to the year reflecting the positive conditions in the central London retail and residential property markets and the quality of the Group's portfolio. We continue to see strong demand for new space at Covent Garden from retailers and restaurants with a number of new signings. The receipt of the Secretary of State's approval for the land agreement with LBHF is another major milestone in establishing the Earls Court Masterplan."

New lettings at Covent Garden

-      8 new retailer and restaurant signings including Galeria Melissa at 43 King Street

-      New lettings and renewals at 10.3 per cent above December 2012 ERV

-      Launch of The Russell, Capco's second luxury residential conversion

Continued momentum on Earls Court Masterplan

-      Secretary of State approval for the Conditional Land Sale Agreement

-     Completion of agreement with Network Rail in regard to its air space over the West London Line within the Earls Court Masterplan

Progress towards implementation at Lillie Square

-      Design amendments to enhance the Lillie Square scheme submitted to LBHF in March

Strong financial position

-      Group LTV 12 per cent (based on December 2012 valuations)

-      Cash and available facilities of £361 million at 31 March 2013

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/Vanessa Hillary, College Hill Associates  [phone]

Covent Garden

The estate has seen an active start to the year in line with the ongoing strategy to drive value in Covent Garden through creative asset management, acquisitions and strategic development opportunities. Occupancy as at 31 March 2013 was 99 per cent and footfall remains strong at 44 million visitors. New lettings and renewals (excluding those with non-standard terms such as development breaks) representing £2.0 million of rental income per annum have been contracted at 10.3 per cent above the December 2012 ERV during the year to date.

Retail: Demand for new space remains high. Galeria Melissa has signed a new 10 year lease for 43 King Street, the unit previously occupied by Rugby Ralph Lauren, to create a new flagship concept for the Brazilian shoe brand. The agreed rent is 15.4 per cent above December 2012 ERV with an ITZA (in terms of Zone A) of £600psf. Lululemon Athletica and Y-3 have taken space on Floral Street. King Street has seen the opening of Twenty8Twelve as well as Hackett House, a new concept from the men's retailer. Aesop and Sandro will open on King Street shortly, further strengthening the contemporary luxury offering on the street.

Food & dining: Keith McNally's Balthazar opened in Covent Garden in February creating the destination restaurant in the area for Londoners and visitors. The Market Building will see the opening of Shake Shack this summer, the first in Europe. Godiva has signed a new lease on the North range of the Market Building.  The former Walkabout space on Henrietta Street is currently being fitted out by Copenhagen's Sticks'n'Sushi and is due to open in the coming months.

Residential: Following the successful completion of sales of The Henrietta apartments, the second luxury residential building in Covent Garden, The Russell, was launched in April. It comprises five apartments with two duplex penthouses and three luxury lateral apartments. Contracts were exchanged this month for the sale of the first apartment. Work has started on site at The Beecham, another landmark building on the south-west corner of the Piazza, and The Southampton, both of which will come to market in 2014.

Future Developments: A potential new mixed-use development between Floral and King Street, known as Kings Carriage, is being progressed. The scheme includes retail and restaurant space, residential apartments and a north-south connection between Long Acre and King Street. In April a public consultation regarding the proposals was undertaken with stakeholders in the Covent Garden area. Planning applications are currently being prepared and will be submitted shortly.

Earls Court Masterplan

Progress continues within the Earls Court & West Kensington Opportunity Area ("ECOA") following the resolution to grant consent for Sir Terry Farrell's Masterplan from both the London Borough of Hammersmith & Fulham ("LBHF") and the Royal Borough of Kensington & Chelsea ("RBKC") in 2012.

Following the signing of the Conditional Land Sale Agreement ("CLSA") with LBHF in January 2013, the Secretary of State for the Department of Communities and Local Government approved the land transfer of the West Kensington and Gibbs Green estates in April. The CLSA provides Capco with the option to acquire approximately 22 acres of land in the ECOA for £105 million plus the re-provision of the 760 homes currently on the estates.

The application for the judicial review in relation to the CLSA was refused for a second time in April at an oral hearing, after being denied initially in January. As previously stated, the judicial review against LBHF and RBKC relating to the Supplementary Planning Document is expected to be heard in July.

In March the agreement with Network Rail was completed regarding the air rights above the West London Line. As part of the agreement, Capco has secured a new 999 year lease to replace the existing lease in respect of the Earls Court 2 site for an initial consideration of £5.3 million. Within the terms of the agreement, Capco can exercise options for a period of 50 years for further 999 year leases over the remainder of the West London Line to allow for development of the Lost River Park within the Earls Court Masterplan. Network Rail is entitled to further payments of 5.55% of the residual land value which will be payable by the developer at the time development of each phase of the Masterplan is initiated.

As outlined at the time of the release of Capco's 2012 annual results, discussions continue with Transport for London in relation to a restructuring of Capco's existing leasehold interests at Earls Court.

Lillie Square (formerly Seagrave Road)

The planning amendments in respect of the enhancement of the Lillie Square scheme were submitted to LBHF in March. The marketing programme to launch pre-sales of the scheme is being finalised alongside preparation for the procurement of the construction works.

Venues Business

The operating business continues to perform in line with expectations, reflecting the uncertainty around the future of the Earls Court venue. Olympia has been rebranded as Olympia London following the investment in the facility over the past two years.

Financial position

The Group financial position remains strong, with loan-to-value of 12 per cent (based on 31 December property values) and liquidity of £361 million.

	31 March 2013	31 December 2012
Gross debt	£343m	£348m
Cash balance	£145m	£185m
Net debt	£198m	£164m
Liquidity (cash and available facilities)	£361m	£401m
Property loan-to-value	12%	10%
Weighted average debt maturity	4.6 years	4.8 years
Weighted average cost of debt	5.2%	5.2%
Proportion of gross debt with interest rate protection	100%	100%

As at 31 March 2013, Capco had capital commitments of £15.8 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):

Capco is one of the largest investment and development property companies that specialises in central London real estate and is a constituent of the FTSE-250 Index. CAPCO holds 2.8 million square feet of assets valued at £1.7 billion (as at 31 December 2012) in two landmark London estates: Covent Garden, which has assets valued at £952 million, including the historic Market Building and Earls Court & Olympia Group including 50 per cent of the Empress State building in Earls Court amounting to aggregate property assets of £721 million. The company is listed on the London Stock Exchange and the JSE, Johannesburg. 

www.capitalandcounties.com

 

END

 

 

IMSBLGDUUSGBGXD