Capital & Counties retail strength offsets slowdown

24th Feb 2016 08:03

(ShareCast News) - Covent Garden and Earls Court owner Capital & Counties Properties generated a 16% increase in net asset value after a strong year for retail leasing but a slowdown in the second half of the year hit residential activity.The FTSE 250 group, which is still mulling whether or not to sell its venues business, said it remained confident that its assets were positioned to create long-term value despite expecting "increasing uncertainty" to effect the market in the medium term.With adjusted earnings per share of 0.9p broadly in-line with expectations, Capco proposed a final dividend of 1p per share for a year's total of 1.5p.For calendar 2015, Capco's retail clients levels of certainty tailed off, as although Covent Garden enjoyed its most active year of leasing there was a slow-down in the prime central London market that hit residential activity at Earls Court.Group EPRA adjusted, diluted NAV rise 16% to 361p per share, of which the second half of the year contributed a 6% rise. Total property value rose 14% to £3.7bn over the year for a 17% total return.Covent Garden property value grew 16% to £2.0bn, with the estimated rental value (ERV) up 12% to £86m and on track to hit £100m by December 2017.The group's interests in Earls Court, which includes the £300m Olympia exhibition centre that has interested buyers such as the Madison Square Garden Company (MSGC) and reportedly a handful of others, increased in value by 9% to £1.4bn.Demolition of the EC1 and EC2 is underway as part of a strategic scheme to rejig and de-risk Capco's land holdings, with construction of Phase 1 of Lillie Square on track with first completions expected this year.A significant slow-down in the prime central London market saw Capco reserved or exchange 40%, around 30 flats, in the five months of Lillie Square's Phase 2, compared to 200 reserved/exchanged in the first five weeks of Phase 1, though pricing has held up so far with sales on average 5% higher.Looking forward, chief executive Ian Hawksworth said: "Whilst we expect increasing uncertainty reflecting global and political challenges, our strategy at Capco remains clear and focused. London's economic prospects remain strong and its population continues to grow. Backed by a robust capital structure, with a conservative LTV of 16%, our prime assets are well positioned for long-term performance."We enter a new year with clear objectives to drive value creation for our shareholders from our two exceptional estates."Shares in the company fell 3.2% to 332.2p by just after 0900 GMT on Wednesday.