London landlord Shaftesbury raises £307m, Capco invest further £65m

By

Sandra Halliday

Published
Oct 22, 2020

Shaftesbury became the latest London landlord on Thursday to announce that it's raising extra capital with the company issuing new shares in order to raise £307 million. This should give it the financial flexibility to navigate the current challenges it's facing due to the pandemic.

The company said it had assessed its financial position in light of the implications of the Covid-19 pandemic for its short- and medium-term prospects and decided to issue equity “to help ensure the group maintains a strong financial base, is positioned to return to long-term growth as pandemic issues recede and, should conditions improve, is able to invest further in its exceptional portfolio.”

Shaftesbury is one of the most important landlords in London’s shopping districts, owning large chunks of the West End and Covent Garden. This means it has been hit particularly hard by the plunging tourist and office worker numbers in London since the pandemic hit.

News of the new shares hurt the firm’s share price on Thursday, sending it down over 13%. 

Existing shareholder Capital & Counties Properties — or Capco, which runs London’s Covent Garden market — said it will take part in the fundraising to the tune of £65 million.

After stumping up this new cash, it means Capco will actually own a 25% stake in Shaftesbury. The company said it's taking part because it sees the investment at an attractive price given the long-term prospects and resilience of prime property in central London. It also extends its ability to invest in attractive opportunities in or near Covent Garden. 

As mentioned, Shaftesbury isn't the first UK landlord to resort to major fundraising efforts this year following the devastating impact of the pandemic. 

A combination of tenants withholding rent, going under or opting for company voluntary arrangements, plus others closing a limited number of stores, and still more not opening new stores at the rate they would have done, has caused major problems for landlords in 2020.

Many have found themselves strapped for cash and have had little alternative but to issue new shares or take on extra debt in order to generate funds.

But most have managed to avoid the situation that Intu Properties found itself in with that company filing for administration and its shopping centres gradually being hived off to new managers.