May 8, 2022
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Capco and Shaftesbury in merger talks, combo would be London super-landlord

May 8, 2022

There has been speculation for several years that West End landlords Capco and Shaftesbury could link up and now it seems that they really are in talks about a merger that would value the joint firm at around £3.5 billion.

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Capco — or Capital & Counties Properties — is particularly prominent in Covent Garden while Shaftesbury also owns property nearby in Seven Dials, as well as in key locations like Carnaby and Chinatown.

Sky News reported that the deal would be an all-share one and that the talks are at an “advanced” stage, with an agreement possibly being announced within weeks. Neither company has commented so far.

Speculation over a merger started back in May 2020 when Capco bought a 26% stake in Shaftesbury for £436 million as property tycoon Samuel Tak Lee sold his holding.

Landlords were hit hard by the restrictions during the pandemic as stores stayed closed and London’s all-important office workers and international tourists stayed at home. That led to many tenants withholding rent, with a number of retailers going under or those still operating shutting down numerous loss-making stores for good. The weak physical retail environment since then has added to the problems even though stores have been allowed to open for some time.

The failure of multiple restaurant chains was also a major challenge for London landlords.

Shaftesbury raised £300 million by selling shares in autumn 2020, with Capco taking part in the cash call.

While retail footfall remains below pre-pandemic levels, major shopping destinations — like those owned by these two companies — have bounced back in terms of new tenants signing up and that bodes well for their future performances. A few months ago, Shaftesbury said its vacancy rate was below 5% for the first time since the pandemic started. And Capco’s CEO also talked of a more positive outlook at the time, with leasing demand helping to drive up property values.

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