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Capital & Counties Properties (Capco) bags Tower House

Posted in News on April 19, 2017

London-focused property company Capital & Counties Properties (Capco) has acquired the freehold interest of Tower House in the Covent Garden precinct for R1.1bn (£65m) before purchaser’s costs.

Capco already owns the Covent Garden development wherein Tower House is located and Earls Court, a large tract of undeveloped land that the company plans to turn into one of the largest new residential suburbs in London.

Covent Garden lies on the eastern fringes of London’s West End, between St Martin’s and Drury lanes.

Capco is responsible for the management and curation of more than 92,903m² of space at Covent Garden valued at £2.1bn as at the end of June.

Tower House has been bought from Derwent London. The property is a substantial corner building located at the junction of Southampton and Tavistock streets with views towards the Piazza.

The multilet building produces an annual rental income of £3.1m. Capco CE Ian Hawksworth said the deal effectively expanded the key asset, Covent Garden.

“Covent Garden is a worldclass retail and dining destination and Southampton Street is an important gateway to the estate. This acquisition is in line with our strategy to expand our footprint, acquire prime assets and invest in our estate,” Hawksworth said.

Anton de Goede, property analyst at Coronation Fund Managers, said Capco was looking to add value to Covent Garden. “The acquisition is in line with management’s stated objective to increase its footprint in the broader Covent Garden area with value-adding properties,” he said.

John Burns, CEO of Derwent London, said the deal was part of his company’s intention to recycle capital.

Capco bore more pain than any other rand hedge counter on the JSE following the Brexit vote in May. The share price collapsed 33% in the first two weeks after the UK voted to leave the EU, leaving a total drop of 45% from the company’s December record high of just more than R100.

The company’s share price closed at R46.69 on Monday, meaning it has lost nearly 52% year to date. However, analysts recently said Covent Garden was a strong asset.

“We believe the long-term investment case for Capital & Counties remains intact and hinges around its unique quality retail portfolio, which should prove defensive and continue to achieve good rental growth,” Lesiba Ledwaba, a fund manager at Ashburton Investments, has said.

Anas Madhi, an executive director at Meago Asset Managers, has previously said Covent Garden is a tourist landmark that can gain from increased foreign tourism spending on the back of a weaker British pound.