Shaftesbury Capital, the central London mixed-use real estate investment trust (Reit), has formed a strategic long-term partnership with Norges Bank Investment Management (NBIM) in respect of its Covent Garden portfolio.
The market welcomed the deal, with the company’s shares surging 18.1% to R32.50 by 10.20am on the JSE.
Shaftesbury exchanged contracts for the sale of a 25% non-controlling interest in the Covent Garden estate to NBIM. Shaftesbury will retain 75% ownership and management control over the estate.
The transaction values the Covent Garden estate at £2.7bn, in line with its independent property valuation at the end of December, with expected gross cash proceeds of about £570m, Shaftesbury said in a statement on Thursday.
Completion of the deal is expected in early April.
Covent Garden is situated in the heart of the West End of London, concentrated around the iconic Piazza, the Market Building and surrounding streets, together with Seven Dials.
It is a mixed-use portfolio of assets, with 74% of the property value represented by retail, and food and beverage, and 26% by office and residential assets.
The estate provides a seven-days-a-week trading environment and exposure to a diverse customer base, which has proven to be resilient throughout economic cycles, Shaftesbury said.
The portfolio has a net initial yield of 3.6%, annualised gross income of £104m and an estimated rental value of £134m.
The company had earlier confirmed the discussions with Norges Bank in response to recent market speculation.
Shaftesbury said the transaction positioned the business for enhanced investment and expansion opportunities both within the partnership and the broader group, adding to its growth prospects.
Shaftesbury Capital CEO Ian Hawksworth said the investment by a leading global real estate investor demonstrates the quality of the group’s portfolio.
“This partnership brings together two long-term investors who have a shared confidence in, and ambitions for, the growth prospects of the Covent Garden estate and the West End. Through partnering with private capital, this transaction leverages our operating experience and assets, enhancing growth and expansion opportunities across our portfolio while strengthening our financial position and providing significant optionality to the group,” he added.
Jayesh Patel, head of UK real estate at NBIM, said the investment underscored NBIM’s belief in the strength of London, with the portfolio complementing its other high-quality West End investments.
“Covent Garden is one of the world’s most recognised retail, leisure and cultural destinations and we look forward to supporting Shaftesbury Capital’s management team, with their strong track record of delivering the growth potential of this prime West End estate,” Patel added.
The LSE- and JSE-listed company is a central London mixed-use Reit and is a constituent of the FTSE 250 index.
Its property portfolio, valued at £5bn, extends to 2.7-million square feet of lettable space in London’s West End.
The group was created by the all-share merger of Capital & Counties Properties and Shaftesbury in March 2023. About £246.6m of disposals have been completed since the merger, with £86m reinvested in acquisitions, improving the quality of the portfolio.
For the year to end-December the group reported an 8% like-for-like increase in annualised gross income to £202.8m, while underlying earnings increased by 16.2% to 4 pence per share.
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