| Tue 8 Nov 2011, 9:00 | | CCO - Capital & Counties Properties PLC - Interim management statement |
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JSE CCO
CCO
CCO - Capital & Counties Properties PLC - Interim management statement
for the period 1 July to 8 November 2011
Capital & Counties Properties PLC
(Incorporated and registered in the United Kingdom and Wales with registration
Number 07145041 and registered in South Africa as an external company with
Registration Number 2010/003387/10)
JSE code: CCO
ISIN: GB00B62G9D36
CAPITAL & COUNTIES PROPERTIES PLC (the "Company")
Press Release
8 November 2011
CAPITAL & COUNTIES PROPERTIES PLC
INTERIM MANAGEMENT STATEMENT
FOR THE PERIOD 1 JULY TO 8 NOVEMBER 2011
Highlights
* Covent Garden occupancy strong, with new openings of Rugby Ralph Lauren,
Brora, Rabeanco and Oliver Sweeney; on track for 2013 ERV target of GBP50
million
* Continued progress on planning for Earls Court & West Kensington
Opportunity Area ("ECOA") and Seagrave Road, with first stage of public
consultation completed in September
* Olympia`s new West Hall topped out in September, works to be completed by
year-end
* GBP300 million debt refinancing completed for Covent Garden, extending debt
maturity, providing further capital for acquisitions and allowing efficient
use of cash balances
Ian Hawksworth, Chief Executive of Capital & Counties Properties PLC, commented:
"Capco`s businesses have performed well during the period despite the difficult
economic environment. The first public consultation period was completed for the
Earls Court Opportunity Area and Seagrave Road. Covent Garden continues to make
good progress, with letting activity above ERV and important new openings across
the estate, whilst the new Covent Garden debt facility removes the refinancing
risk. We remain confident that the continued implementation of our strategy will
deliver superior returns across the business."
A conference call for analysts and investors is being held today at 8:30am UK
time.
Enquiries
Capital & Counties Properties PLC
Ian Hawksworth: Chief Executive +44 (0)20 3214 9188
Soumen Das: Finance Director +44 (0)20 3214 9183
Public relations
UK: Michael Sandler/Wendy Baker, Hudson Sandler +44 (0)20 7796 4133
SA: Nicholas Williams, College Hill Associates +27 (0)11 447 3030
Covent Garden
Covent Garden is now well established as a high quality retail destination in
the West End, with new retailers and restaurants continuing to open on the
estate in line with the active asset management and leasing strategy. As
anticipated, September saw Rugby Ralph Lauren open its first and only store in
Europe on King Street, as well as Brora and pop-up restaurant Canteen open in
the Market Building. In October, Hong Kong-based leather handbag designer
Rabeanco opened its first store in the UK setting a new record rent for Long
Acre. Oliver Sweeney also opened its new boutique on King Street in November.
Planning consent has been granted for the conversion of 37 King Street to retail
use. Brand interest continues to be high across the estate.
Letting transactions representing GBP1.9 million of passing rent have been
concluded since 30 June 2011 at an average of 0.9 per cent above June 2011 ERV,
and the estate is on track to meet its 2013 ERV target of GBP50 million.
Footfall on a rolling 12 month basis as at September 2011 was 44.8 million. The
EPRA adjusted occupancy rate for the estate was 96.6 per cent as at 30 September
2011.
Under the Covent Garden Living brand the first luxury residential scheme, West
Piazza Apartments at 34 Henrietta Street, is on track to be completed in
December and will be brought to the market in the New Year. Planning approval
for the residential conversion of Russell Chambers to create East Piazza
Apartments was granted in August, and a planning application has been submitted
for 1a Henrietta Street (which was acquired earlier this year) for a further
residential conversion and new retail or F&B anchor on the south side of the
Piazza.
The space for the new cultural concept from the London Film Museum will be
completed and handed over in November, whilst the works continue in order to
prepare for Caprice Holdings` new restaurant concept.
ECOA Masterplan
Following the submission of the outline planning applications for ECOA in June,
the first stage of public consultation by the Royal Borough of Kensington &
Chelsea ("RBKC") and London Borough of Hammersmith & Fulham ("LBHF") was
completed in September. The scheme will provide 7,500 new homes and 12,000 new
jobs and will benefit both London and the local communities. In addition to the
new homes, Sir Terry Farrell`s Masterplan includes offices, leisure, hotel and
retail space, as well as a new school, library, an integrated health centre and
23.5 acres of public open space including the 5 acre `Lost River Park`.
Following the adoption of the revised London Plan by the Mayor in July, LBHF
adopted its Core Strategy in October which confirms ECOA as a strategic site for
London and the Borough. We expect a second round of consultation on the
Supplementary Planning Document to commence shortly on the authorities`
preferred option, following the first consultation in April this year.
Discussions with Transport for London ("TfL") continue to progress in respect of
the re-gearing of Capco`s long leasehold interests at Earls Court, and the
inclusion of the Lillie Bridge Depot land in a comprehensive regeneration of the
ECOA.
Negotiations also continue to progress with LBHF under the terms of the
Exclusivity Agreement signed in July, with regard to the inclusion of LBHF`s
land in a comprehensive regeneration of the ECOA. An application for judicial
review of the Exclusivity Agreement was issued to LBHF in October by a resident
of the West Kensington Estate. As an interested party, Capco has been notified
and this enables Capco to submit representations and participate in the
proceedings. The request for judicial review of the Exclusivity Agreement has no
bearing on the planning applications for the ECOA or for Seagrave Road, and is
not anticipated to delay the discussions with LBHF or TfL.
Seagrave Road
The first stage of public consultation by LBHF in respect of the planning
application that was submitted in June was completed in September. This planning
application is for the 7.5 acre site to deliver 808 new homes and a new London
square.
The Group continues to assess its options on taking forward the development of
the Seagrave Road site if and when planning consent is achieved, including
participation in a potential joint venture.
EC&O Venues
EC&O Venues continues to perform in line with our expectations. Olympia recently
hosted the Speciality & Fine Food Fair attracting the highest visitor numbers in
the show`s twelve year history. In preparation for next year`s Olympic Games,
Earls Court hosted the trial tournament for Olympic Volleyball in July.
A milestone was reached in the Olympia redevelopment as the West Hall `topped
out` in traditional style on 9 September and works are due to be completed by
the end of 2011.
TfL has announced its plans to proceed with the closing of the permanent
District Line service to Olympia in December whilst enhancing other services to
Olympia, including the Overground line. EC&O Venues has successfully agreed
several mitigating measures with TfL, including improved wayfinding, signage,
and weekend services to ensure continued access to the venue.
The Great Capital Partnership
The Great Capital Partnership is actively managing its portfolio and following a
release of capital from mature assets earlier in the year, it continues to focus
on its core assets on Regent Street and Piccadilly. Proceeds of GBP78 million
(Capco share: GBP39 million) from disposals previously contracted were received
during the period.
China
The realisation of the Group`s investments in China continues with a number of
contracted sales now completed. A further GBP15 million was received during the
period, leaving only two assets within the fund (one of which is contracted for
sale). The strategy to dispose of mature assets will continue and potential
reinvestment options are being considered.
Refinancing
The Group is pleased to have agreed a new GBP300 million secured debt facility
for Covent Garden, to refinance the existing GBP222 million loan facility that
was due to mature in 2013. The new facility has been provided by BNP Paribas,
HSBC Bank plc, Bayern LB, Lloyds Banking Group, Deutsche Pfandbriefbank and
Santander, with BNP Paribas and HSBC Bank plc acting as Mandated Lead Arrangers.
Key features of the new loan are:
* Extends the maturity on GBP300 million of the Group`s debt until October
2016, with a further 2 year extension available at Capco`s option subject
to meeting certain financial covenants
* GBP150 million has been drawn initially. A further GBP90 million is
available allowing Capco to use its cash balance more efficiently by paying
down debt and redrawing when required
* In addition, GBP60 million of the facility is available to finance existing
Covent Garden assets not currently secured, or to finance new acquisitions
in the Covent Garden area
* The financial covenants include a loan-to-value covenant of 70 per cent and
interest cover ratio of 130 per cent
The cost of debt on the new facilities will be circa 4 per cent on the drawn
amount, with hedging in place using swaps and caps. Interest rate swaps relating
to the previous facility have been closed out at a cost of GBP13.5 million.
In addition to the above, GBP10 million of the EC&O secured loan was prepaid in
November, with related swap breakage costs of GBP0.1 million.
Financial position
As at 30 September 2011, pro forma adjusted for the Covent Garden refinancing
and the EC&O loan repayment:
* Gross debt for the Group was GBP554 million (30 June 2011 GBP641 million),
with net debt of GBP468 million (30 June 2011 GBP452 million)
* The Group`s cash balances and available facilities were GBP242 million (30
June 2011 GBP196 million)
* Based on 30 June 2011 property values, the pro forma debt to assets ratio
was 31 per cent (30 June 2011 30 per cent)
* The maturity profile of the Group`s available debt facilities was 3.8 years
(30 June 2011: 2.7 years)
* The average cost of debt was 5.7 per cent (30 June 2011: 5.9 per cent),
with 95 per cent of the debt hedged into fixed interest rates.
As at 30 September 2011 Capco had capital commitments of GBP23 million.
South Africa listing
The South African Minister of Finance announced on 25 October that the National
Treasury has proposed reclassifying all inward listed shares on the JSE (which
includes Capco`s secondary listing on the JSE) as `domestic` shares for trading
purposes. The reclassification would mean that South African institutional
investors will have no limit on holdings in Capco if those shares are acquired
on the JSE. Capco`s South African register currently represents 21 per cent of
the overall register.
We understand that the new dispensation will become effective once the Financial
Surveillance Department of the South African Reserve Bank and the Financial
Services Board have reached agreement on the reporting requirements.
Prior to the announcement of this proposal, Capco applied to the South African
authorities for the extension of the two year exemption that was granted to
institutional shareholders receiving Capco shares on demerger. The authorities
have now approved a one year extension until May 2013. However, this extension
may be unnecessary if the proposed reclassification comes into effect before
then.
This press release includes statements that are forward-looking in nature.
Forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements of
Capital & Counties Properties PLC to be materially different from any future
results, performance or achievements expressed or implied by such forward-
looking statements. Any information contained in this press release on the price
at which shares or other securities in Capital & Counties Properties PLC have
been bought or sold in the past, or on the yield on such shares or other
securities, should not be relied upon as a guide to future performance.
About Capital & Counties Properties PLC (Capco)
Capco is one of the largest investment and development property companies that
specialises in central London real estate and is a constituent of the FTSE 250
Index. Capco holds 3.2 million square feet of assets valued at GBP1.5 billion
(30 June 2011) in three landmark London estates: Covent Garden, which has assets
valued at GBP780 million, including the historic Market Building; Earls Court &
Olympia Group and 50 per cent of the Empress State building in Earls Court
amounting to aggregate property assets of GBP488 million, and The Great Capital
Partnership, a joint venture with Great Portland Estates, which holds prime West
End properties of which Capco`s share is GBP240 million. The company is listed
on the London Stock Exchange and the JSE, Johannesburg.
www.capitalandcounties.com
Sponsor:
Merrill Lynch SA (Pty) Limited
Date: 08/11/2011 09:00:11 Produced by the JSE SENS Department.
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