(Alliance News) - Capital & Counties Properties PLC on Tuesday said that the value of its investment in Shaftesbury PLC had shrunk due to high volatility.
In a June-October trading update, the London and Johannesburg-listed property firm said its investment in Shaftesbury shares was valued at GBP357 million based on a share price of 368 pence per share on September 30, down 29% from GBP506 million as at June 30 based on a price of 522p a share.
This lower value comes as Capco said last week it expected its merger with Shaftesbury to be effective in the first quarter next year, as a UK watchdog is yet to begin a probe on the deal.
The two companies are involved in "customary pre-notification discussions" with the UK's Competition & Markets Authority.
Shaftesbury and Capco agreed to terms of the deal in June. Shaftesbury shareholders will receive 3.356 new Capco shares for each Shaftesbury share held, giving Shaftesbury shareholders a 53% stake in the combined company and Capco shareholders 47%.
Capco's investments are focused on London's West End, Covent Garden and Shaftesbury.
Also Capco said the independent property valuation of Covent Garden, located in London, was GBP1.78 billion, representing a like-for-like decrease of 2.0% since June 30.
It said the volatile macroeconomic environment had an impact on asset valuations.
In a trading statement, Capco said performance at Covent Garden remained resilient, with positive operational indicators on footfall and sales. It said 35 new leases and renewals were signed since June, securing GBP3.0 million of contracted income, 6.2% ahead of June 30 2022 estimated rental value, or ERV.
Rent collection in relation to the fourth quarter of financial year 2022, invoiced in September, is currently 97%.
In a separate filing, Shaftesbury said on Tuesday the indicative external valuation of the wholly-owned portfolio as at September 30 was GBP3.2 billion, down from GBP3.3 billion since March 31.
"Valuers have reported an outward shift in commercial valuation yields, due to the impact on investment market sentiment of globally-rising finance rates and the deterioration in the macroeconomic outlook," Shaftesbury said.
The company said on Tuesday leasing activity remains good across all uses. Over six months that ended September 30, it concluded commercial lettings, renewals and rent reviews with a rental value of GBP15.8 million, and residential lettings totalling GBP6.2 million of income.
In Johannesburg, shares in Capco rose by 2.3% to ZAR23.07 on Tuesday afternoon. The stock was up 2.4% to 109.70 pence each in London. Shaftesbury stock was up 3.4% at 380.20p.
By Artwell Dlamini; artwelldlamini@alliancenews.com
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