CapCo release shares for Covent Garden investment

Global business and technology consultancy Capital & Counties are to release 68.4m new 25p shares to further investment in its Covent Garden estate.

A spokesman said that since its demerger from specialised business insurers Liberty International, the value of the Covent Garden estate had risen from £548m at the end of 2009 to £856m as of 30 June 2012.

ERV has risen from £33.2m to £47.1m in the same period, with the firm speculating further potential growth of £13m to £18m by the end of 2015.

The board confirmed its intentions to “commit significant incremental capital” of approximately £200m raised from existing resources, as well as the proceeds from placing tenants, to generate further growth in the estate over the coming 12 to 18 months.

Plans include the expansion of the estate through further acquisitions, such as luxury food and dining centres, to improve the diversity of the tenancy group and drive up ERV. Also included are the repositioning of assets towards high-value uses, in particular the conversion of upper-floor offices to residential property, as well as the creation of entirely new spaces through renovation and redevelopment.

CapCo hope to complete a further £50m of acquisitions by the end of 2012, of which £18m has been completed to date with a further £24m outlay set for the coming months.

Further identified projects are forecast to require £30m of capital expenditure on tenant engineering and two residential property conversions over the next 12 to 18 months, including The Beecham and 30-32 Southampton Street.

The move will come as a boost to London-based property investors who will see this as a sign of increasing market confidence. Whilst the serviced office industry is set to lose earmarked property in the estate, the regeneration of the area as a whole is likely to drive up demand for office capacity in surrounding areas.