APG and Delancey snap up Capco residential arm for €500m

Dutch pension fund APG and London-based Delancey have acquired Capital & Counties's (Capco) residential scheme at Earl's Court, excluding Lillie Square, for £425 mln (€499 mln).

London and Johannesburg-listed Capco, which also owns Covent Garden, said that it wanted to concentrate on managing the iconic retail estate. The firm signalled earlier this year that it thought Covent Garden would work better as a REIT structure, and might spin Earl's Court off as a separate 'growth-focused company', according to CEO Ian Hawksworth.

'The disposal positions Capco as a prime central London property investment business, centred on Covent Garden, with a continued focus on driving rental growth and securing income. The business has significant financial flexibility to capitalise on investment opportunities and is well-positioned to deliver attractive long-term returns for shareholders,' the company said in a statement.

Capco will retain a stake in Lillie Square, which it developed in joint venture with members of the Kwok family (KFI).

Earls Court issues
Last month, UK property developer Nicholas Candy aid his investment fund, Candy Ventures, was considering a cash offer for Capco in its entirety.

Capco said at the time that there had been 'no approach made to the company by Candy Ventures or any other party', adding that it had recently entered a 'short period of exclusivity' with investment firm Delancey about the possible sale of its Earls Court development in West London.

The £425 mln deal struck with APG and Delancey compares to a balance sheet value as of June 30 of £508 mln.

Capco's ambitious plans to build 7,500 luxury homes in the Earl's Court area have repeatedly driven the firm into conflict with the district's local authority, Hammersmith & Fulham Council.

The council recently said in a report that only '200 private homes have been delivered' to date, adding that 'the project has completely stalled over the last six years, with only demolition of the exhibition centres taking place'.

Capco’s loan to value will be reduced from 19% to 15% as a result of the sale, with cash and undrawn facilities of more than £900 mln.

Candy Ventures said they would withdraw any interest in buying Capco as a result.

 

 

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