Interim Management Statement

RNS Number : 8301V

Capital & Counties Properties Plc

09 November 2010

 



9 November 2010

CAPITAL & COUNTIES PROPERTIES PLC

INTERIM MANAGEMENT STATEMENT

FOR THE PERIOD 1 JULY TO 9 NOVEMBER 2010

Highlights

·     The Covent Garden estate has continued to perform well with recent lettings to several strong brands in line with our zoning strategy, including Rugby Ralph Lauren, Laduree and Jack Wolfskin.

·     The opening of the world's largest Apple store in August 2010 attracted over 20,000 visitors on its first day of trade which helped to drive an 11 per cent footfall uplift in Covent Garden in the first month of trading and continues to attract high numbers of visitors.

·     The Earls Court planning process has advanced well during the period with good progress on the planning policy and the development of the masterplan.

·     The London Borough of Hammersmith & Fulham has resolved to grant planning permission for the expansion of the Olympia Exhibition Centre to create an enhanced events and exhibitions facility.

·     As announced today, a refocusing of the Great Capital Partnership on its West End holdings has been agreed.

Ian Hawksworth, Chief Executive of Capco commented:

"We have continued to make good progress across the business in the implementation of our strategy to unlock latent value from our estates. Further progress has been made in Covent Garden with strong demand from retailers driving rents in excess of the valuer's June 2010 estimates of ERV. Plans for Earls Court and Olympia have advanced with the positive planning decision for the redevelopment at Olympia and we remain on course to submit a planning application for the Earls Court site in the first half of 2011."

Covent Garden

We have continued to make progress with our repositioning plan for the Covent Garden estate, with 32 rent reviews, renewals and lettings agreed since July totalling £6.2 million of rental value per annum at approximately 7 per cent above June 2010 ERV. Recent lettings include Laduree, Whistles, Jack Wolfskin, Pandora and Sunglass Hut which set a new record Zone A rent level for James Street. In addition to this, two high profile exclusive "pop-up" stores have opened: Lucy in Disguise by Lily Allen and, for the first time in the UK, American label Kate Spade.

The luxury zoning strategy for King Street is developing well.  The lease agreement with the Burberry Group in August has been followed with a highly competitive pitch between three international luxury brands resulting in an agreement to lease 43 King Street to Rugby Ralph Lauren at a rent substantially higher than the valuer's June ERV.  During this period, 37 King Street was acquired which increased our ownership on the street.

The revised planning application for a destination restaurant and cultural offering for the Flower Cellars has been submitted to Westminster Council. The Covent Garden residential project is progressing well with work on site at 34 Henrietta Street underway.

The estate has an occupancy rate of 97.1 per cent adjusted for areas held for development and under offer as at 30 September. Footfall for the 12 months to September increased 7 per cent to 46.4 million visitors. To date 99 per cent of the September quarter's rent has been received.

Earls Court & Olympia Group

The exhibitions business has been performing well year to date. Recent shows have included Top Gear Live, 100% Design and The Ski Show. As at 9 November, 65 per cent of 2011 budgeted licence fees have been contracted.

During October, the London Borough of Hammersmith & Fulham (LBHF) resolved to grant planning permission for the expansion and enhancement of the Olympia Exhibition Centre. The plans include redeveloping the West Hall within its existing footprint but with an additional floor, and improved links to the Grand Hall and Olympia 2. It is intended that works will be undertaken around existing shows at Olympia commencing in early 2011 and scheduled to continue into 2012.

We have taken back control of Seagrave Road car park and intend to submit a planning application during the first half of 2011. We have also acquired a number of adjacent properties on Roxby Place.

Earls Court Masterplan

Plans for the Earls Court site continue to progress well and we remain on course to submit a planning application in Q2 2011.

LBHF has included a comprehensive development of the Earls Court site within its Draft Core Strategy Local Development Framework, subject to a consultation process which is ongoing. The Royal Borough of Kensington & Chelsea (RBKC) has acknowledged support for a significant development on the Earls Court site in their draft Core Strategy.

Furthermore, a Statement of Common Ground on Earls Court has been agreed between Capco, LBHF and RBKC in a submission to the London Plan consultation process. This statement affirms that all parties support in principle a comprehensive mixed-use development of substantial scale across the Earls Court opportunity area.

The concept masterplan was completed at the end of September as planned and we are on track for the public launch of the detailed masterplan in Q1 2011. Consultation is ongoing with all key stakeholders including drop-in exhibitions for the local community.

Great Capital Partnership

A refocusing of the Great Capital Partnership (GCP) on its West End holdings has been agreed. Details have been announced today in a joint statement with Great Portland Estates.

GCP has performed in line with expectations during the period. Asset management activity in Q3 includes 25 letting transactions totalling £2.2 million of rental value per annum (100 per cent) at approximately 2 per cent above June 2010 ERV. The estate has an occupancy rate of 97.5 per cent adjusted for areas held for development and under offer as at 30 September. To date 96.7 per cent of the September quarter's rent has been received.

Other

We were pleased to be invited to participate in the selection process for the appointment of a partner for the development of Lord's Cricket Ground by the MCC (Marylebone Cricket Club). This is potentially an interesting medium-term opportunity for the Group should we be selected.

Our investment in the two China funds continues to perform well, and a partial realisation of our interest may occur during 2011.

Capital Park, Cambridge, was sold during the period for £8 million, leaving the Group with no material exposure outside our central London focus.

Finance

As at 30 September 2010, gross debt was £668 million and cash balance was £183 million, resulting in net debt of £485 million (30 June 2010 £476 million). Based on 30 June 2010 property values, the 30 September 2010 pro forma debt to assets ratio was 37 per cent (30 June 2010 36 per cent).

The weighted average debt maturity at 30 September 2010 was 3.3 years (30 June 2010 3.5 years) and the weighted average cost of gross debt was 5.9 per cent (30 June 2010 5.9 per cent) with 96 per cent of the debt hedged.

ENDS

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, College Hill Associates                                    [phone]

A conference call for analysts is being held today at 9.00am UK time.

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 3.5 million square feet of assets valued at £1.3 billion (as at 30 June 2010) in three landmark London estates: Covent Garden London, which has assets valued at £592 million, including the historic Market Building; Earls Court & Olympia Group and 50 per cent of the Empress State building in Earls Court amounting to aggregate property assets of £443 million; and the Great Capital Partnership, a joint venture with Great Portland Estates, which holds prime West End properties with a total market value of £540 million (Capco share £270 million). The company demerged from Liberty International PLC, now Capital Shopping Centres Group PLC, in May 2010, and is listed on the London Stock Exchange and the JSE, Johannesburg.

 

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