Shaftesbury Capital’s share price soared over 13% on the JSE Thursday morning after announcing plans for a £570 million cash injection through a long-term partnership with Norges Bank Investment Management (NBIM), the Norwegian sovereign wealth fund.
The JSE, A2X, and London-listed UK property group will sell a 25 percent non-controlling interest in the Covent Garden estate to NBIM, with Shaftesbury retaining 75 percent ownership and management control over the estate.
The deal values the Covent Garden estate at £2.7 billion, in line with an independent property valuation as of December 31, 2024, with expected cash proceeds of about £570m. On the JSE, Shaftesbury traded at R31.16 Thursday morning, a price marginally below the R33.50 it was trading at a year before.
“This partnership brings together two long-term investors who have a shared confidence in and ambitions for the growth prospects of Covent Garden and the West End,” said Shaftesbury CEO Ian Hawksworth in a statement.
Completion is expected in April 2025. Covent Garden is a global destination in the heart of the West End of London, centred around the iconic Piazza, the Market Building, and surrounding streets, together with Seven Dials.
It has a mixed-use portfolio of assets, with 74 percent of the value represented by retail, and food & beverage, and 26 percent by office and residential. The estate is a vibrant, high-footfall destination that provides a seven-days-a-week trading environment.
The portfolio covers some 220 buildings and over 850 units, across 1.4 million square feet, excluding 0.1 million square feet of long-leasehold residential interests.
For Shaftesbury, the deal provides benefits including a partnership with a large global investor, with a long-term investment horizon and established presence in London’s West End.
It will also provide investment and expansion opportunities in the partnership and in the group, and it entails a substantial cash investment by NBIM, valuing the estate in line with an independent valuation by CBRE as of December 31, 2024.
Shaftesbury will retain control and management of the estate, with fee income from the partnership reflecting the running costs of managing the estate.
Shaftesbury’s stronger balance sheet would enhance its financial flexibility, with a range of options to deploy the proceeds, including acquisitions, investment into the existing portfolio, and reduced debt.
“Through partnering with private capital, this transaction leverages our operating expertise and assets, enhancing growth and expansion opportunities across our portfolio whilst strengthening our financial position and providing significant optionality to the group,” Hawksworth said.
NBIM Head of UK Estate, Jayesh Patel, said the investment underscored their belief in the strength of London, with the portfolio complementing their other high-quality West End investments.
“Covent Garden is one of the world’s most recognised retail, leisure, and cultural destinations, and we look forward to supporting Shaftesbury Capital’s management team, with their strong track record of delivering the growth potential of this prime West End estate,” he said.
For Shaftesbury, the proceeds would be used initially to reduce drawn debt, particularly for the partial repayment of the Canada Life loan (£67.4m of the £135m, which will utilise about £42m), and in due course, repayment of the £275m of exchangeable bonds due in March 2026. In the meantime, cash would be held on deposit until deployed. Upon completion, Shaftesbury should have access to £1.1bn of liquidity, including £450m of committed undrawn facilities.
Business Report