A worker walks past a picture of the London skyline outside the sales office of a property development in central London. Picture: REUTERS
A worker walks past a picture of the London skyline outside the sales office of a property development in central London. Picture: REUTERS

Ian Hawksworth, CEO of Capital & Counties (CapCo), says the group’s fortunes have improved, helped by London’s economy, which is healthier than the rest of the UK’s.

CapCo was one of the worst-performing property companies in 2016 following the Brexit referendum in May. The owner of iconic London assets Covent Garden and Earls Court saw its share price collapse 51.7% from R102.50 at the end of 2015 to R49.50 at the end of 2016.

Its share price has since stabilised. It closed on Tuesday 0.97% higher at R50.17 a share, up 1.35% year to date.

CapCo’s net rental income was boosted in the six months to June by a positive performance at its retail centric Covent Garden estate. It had also begun to make progress in expanding its other UK asset, Earls Court.

"London is performing strongly compared with the rest of the UK. People are spending more on smart casual clothes and high fashion, which is helping Covent Garden," said Hawksworth. "We believe that CapCo is on a healthier path now post the initial uncertainty following the Brexit referendum," he said.

Commenting on the financial results for the six months to June, Hawksworth said CapCo’s two central London estates had an active start to 2017.

Covent Garden — a largely retail estate which represented two-thirds of CapCo’s business — had been "established as a world class retail and dining destination and continues to deliver positive rental and value growth," Hawksworth said.

There was strong progress across the estate with 43 new leasing transactions signed during the period, including brands such as Kent & Curwen, and a number of new openings including The Henrietta Hotel. The value of the Covent Garden estate rose 1.5% to £2.4bn in the six months to June 2017 compared with the six months to June 2016, with CapCo’s estimated rental value for the asset increasing 2.85% to £98.8m.

But the value of Earls Court, which includes a residential component, declined 2.4% to £1.1bn in a review, partly reflecting the changes to its development programme, according to Hawksworth.

Peter Clark, a portfolio manager at Investec Asset Management, said CapCo’s share price was likely to remain stagnant in the short term.

"The landscape has shifted significantly for Capco compared with two years ago and the value creation potential has [been] reduced, or at least been delayed," he said.

"This has primarily been driven by the Earls Court site and the demand and pricing of residential property in London."

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