An all-share merger between the UK’s biggest real-estate groups, Capital & Counties Properties (Capco) and Shaftesbury, became effective on March 6 after months of awaiting regulatory approvals.
On news of the completed merger, Capco’s share price gained 6.97% to R28.39 during afternoon trade on Monday.
Shares of the new entity, Shaftesbury Capital Plc, will start trading on the London Stock Exchange and JSE on March 7.
With the admission of the new Capco shares, the revised issued share capital of the company will consist of 1,953,170,495 ordinary shares of 25 pence each. This includes 128,350,793 ordinary shares held as security by group entities under the terms of the £275m exchangeable bond. While they are held, group entities will not vote.
Shaftesbury delisted its shares from the premium listing segment of the official list and cancelled the admission to trading of its shares on the LSE’s main market on the morning of March 6, said the company in a statement.
CEO Ian Hawksworth said the merger brought together two highly complementary portfolios to create the leading central London mixed-use real estate investment trust (Reit) Shaftesbury Capital Plc.
“We look ahead with confidence, with an experienced and talented team, to deliver long-term economic and social value for stakeholders and contribute to the success of the West End,” said Hawksworth.
Hawksworth said the focus would be on creating a stronger operational platform of scale and efficiency, including £12m of pretax recurring cost synergies on an annual run rate basis from the end of the second-year post-completion. Maintaining a strong balance sheet with access to significant liquidity in constrained debt capital markets is key.
Other key focus areas include integration of teams and continue to provide differentiated offerings to the tenants, as well as refurbishing and repurposing of heritage properties giving them a new lease of life.
Shaftesbury Capital Plc is the leading central London mixed-use Reit and is a constituent of the FTSE-250 Index. Its property portfolio valued at £4.9bn, extends to 2.9-million square feet of lettable space, across 670 predominantly freehold buildings with about 2,000 individual units across London’s West End.
This mixed-use portfolio of hospitality, leisure, retail, office and residential apartments benefits from diversified income streams with significant revenue growth potential.
At end-December for Capco and end-September for Shaftesbury, the group has annualised gross income of £178m and estimated rental value of £227m.
Combined group net debt as of December 2022 less estimated remaining transaction costs is £1.5bn, with 31% loan-to-value — a key measure of the financial health of a property company.
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