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SHAFTESBURY CAPITAL PLC
(Incorporated and registered in the United Kingdom
with Registration Number 07145051 and
registered in South Africa as an external company
with Registration Number 2010/003387/10)
JSE code: SHC ISIN: GB00B62G9D36
LEI: 549300TTXXZ1SHUI0D54
("the Company")
INVESTOR EVENT AND TRADING UPDATE
Shaftesbury Capital PLC ("Shaftesbury Capital") today publishes a trading update ahead of its inaugural
Investor Event, to be held at 10:30am (UK time) at The Royal Opera House, Covent Garden at which the
senior management team will provide an insight into Shaftesbury Capital's unique, irreplaceable portfolio
and its plans for growth. The presentation materials will be made available on the Group's website later
today. This announcement includes unaudited financial information in relation to the period from
1 July 2023 to 15 November 2023 ('the period').
Ian Hawksworth, Chief Executive, commented:
"Our excellent performance has continued into the second half, with a strong start to the Christmas trading
period. The West End is one of the most vibrant global destinations with an unrivalled concentration of
entertainment and cultural attractions. Footfall remains high and customer sales are tracking 12 per cent
ahead of last year. There is excellent leasing momentum across all uses with 220 leasing transactions signed
so far in the second half, at rents on average six per cent ahead of June 2023 ERV and a strong leasing
pipeline.
Despite the uncertain macroeconomic backdrop, our prime West End portfolio continues to demonstrate its
resilience and appeal. Backed by our strong balance sheet, we look forward with confidence with a focus on
delivering further growth and attractive returns as the leading central London mixed-use REIT."
Summary
- High footfall across our prime portfolio in the West End with a strong start to the Christmas trading
period, customers reporting sales in aggregate 12 per cent above 2022 levels and 16 per cent above
2019 levels
- Sustained demand across all uses; leasing activity in H2 totalling 220 transactions representing #15.6
million of rent, six per cent ahead of 30 June 2023 ERV
- Year to date, 440 leasing transactions were completed, representing #30.2 million of rent, nine per
cent ahead of 31 December 2022 ERV and introducing 50 new retail and hospitality brands and
concepts
- Vacancy remains low: 2.2 per cent of ERV available to let (30 June 2023: 2.5 per cent)
- Continued excellent progress on integration, cost savings running ahead of initial target and
additional opportunities being identified
- #82 million of asset disposals completed, 12 per cent ahead of June 2023 valuation, with five per cent
of total portfolio value initially identified to be recycled
- Robust balance sheet with access to approximately #500 million of liquidity1 and EPRA LTV1 of 30 per
cent (30 June 2023: 31 per cent)
1 Pro forma liquidity and EPRA LTV based on debt and cash balance as at 30 September 2023 and 30 June
2023 property valuation (adjusted for disposals)
Medium-term outlook
The West End's large working population and residential community provide a regular, daily customer base
for its retail, hospitality and leisure businesses. Together with an exceptional number of domestic and
international visitors, this brings a seven day-a-week trading environment. In turn, this drives sustained
customer demand in a market with constrained supply of commercial space, providing the fundamentals for
long-term rental growth.
- Our focus is on rental growth, cost control and cash conversion
- We are targeting rental growth of 5-7 per cent per annum on average over the medium-term
- With stable cap rates, this would result in average total property returns of 7-9 per cent and total
accounting returns of 8-10 per cent
- These return targets are intended to indicate overall direction in the medium term; outcomes for
shorter reporting periods will be highly dependent on activity levels and prevailing market
conditions. Components of the portfolio will have different return profiles
- We are continuing to target efficiencies and additional opportunities as we move beyond the initial
stage of integration following completion of the merger in March 2023. With a focus on the total
amount of property and overhead costs, as well as their relativity to gross income, we are targeting
a significant reduction in the EPRA cost ratio towards 30 per cent over the medium-term
- We will maintain significant liquidity through the next refinancing cycle, and seek to manage the
absolute level of finance costs to deliver efficient conversion of income to earnings and a progressive
dividend profile
- As part of our programme to invest in our portfolio, including sustainability enhancements, it is
expected that annual capital expenditure will on average represent approximately one per cent of
portfolio value
- Five per cent of total portfolio value is expected to be recycled initially, including the #82 million of
asset disposals completed to date
Excellent leasing momentum across all uses
There has been consistently high footfall across our prime portfolio in the West End with a strong start to
the Christmas trading period, and customers reporting sales in aggregate 12 per cent above 2022 levels and
16 per cent above 2019 levels. Covent Garden and Carnaby hosted successful Christmas lights switch-on
events in early November, marking the start of a programme of festive events and shopping evenings. Covent
Garden has a number of brand activations across the Piazza including Marc Jacobs and Sezane, while the
vibrant Carnaby Universe Christmas campaign offers a series of events throughout the period, as well as our
important charity partner, Choose Love.
Excellent leasing momentum continues with 220 leasing transactions signed so far in the second half of the
year, at rents six per cent ahead of June 2023 ERV with a continued strong leasing pipeline.
These leasing transactions comprise:
- 76 commercial lettings and renewals: #9.6 million of rent, seven per cent above 30 June 2023 ERV;
and
- 144 residential lettings and renewals: #6.0 million of rent, 10 per cent above previous passing rents.
440 leasing transactions have been completed so far in 2023 representing #30.2 million of contracted
income, nine per cent ahead of December 2022 ERV. Further details are set out in appendix 1 to this
announcement.
Leasing transactions concluded from 1 July 2023 to 15 November 2023
New
contracted % above
Use Transactions rent June 23 ERV
(#m)
Retail 40 5.5 5
Hospitality & leisure 12 1.8 14
Offices 24 2.3 5
Residential 144 6.0 4
Total 220 15.6 6
In addition, 22 commercial rent reviews were concluded, representing #7.0 million of passing rent, 13 per
cent ahead of previous passing rents.
We continue to strengthen the customer line-up across the portfolio with a flurry of new openings including
luxury brands Hublot, Messika and Girard-Perregaux in Covent Garden's Royal Opera House Arcade.
Performance wear brand Hoka opened its new London flagship store on James Street while Balibaris, the
international menswear label, opened its first European retail location on Floral Street. UK debut stores in
Seven Dials include independent womenswear brand Odd Muse and British jeweller Missoma. Award-
winning cult make-up concept Sculpted by Aimee opened its new UK flagship on Foubert's Place, Carnaby
while eyewear brand Oakley is the latest opening on Carnaby Street joining premium outerwear concept
Jott.
Our hospitality offer continues to evolve with the opening of Italian pasta concept Notto on Henrietta Street,
Covent Garden and Bebe Bob in Soho, located opposite its sibling flagship restaurant Bob Bob Ricard.
Filippino concept Donia opened on the upper floor of Kingly Court, Carnaby while one of China's leading
pastry brands, Master Bao is set to open in Chinatown.
Demand for high quality, well-fitted office space with amenity value and excellent environmental credentials
remains robust across the West End with recent lettings commanding a rental tone of approximately #100
per square foot. There is sustained demand for our residential portfolio comprising 710 apartments, with
rental transactions over the period 10 per cent higher than previous passing rents, and negligible vacancy.
With strong occupier demand and leasing activity through the period, vacancy remains low. EPRA vacancy
(including units under offer) was 5.1 per cent of portfolio ERV (30 June 2023: 5.9 per cent), of which 2.9 per
cent was under offer and 2.2 per cent was available to let (30 June 2023: 2.5 per cent).
Active capital recycling
Since 1 July 2023, we have completed the sale of five properties for gross proceeds of #82 million, 12 per
cent ahead of the 30 June 2023 valuation (before sale costs). The five properties had an ERV of #5.5 million.
A number of acquisition opportunities are under review.
Over the medium-term, we expect approximately one per cent of portfolio value to be invested per annum
in refurbishment, asset management and repositioning opportunities, including actions to improve energy
performance. This year, #30 million capital expenditure has been incurred to date, and capital commitments
amount to #27 million. The ERV of space under refurbishment amounts to #13.5 million across 196,000
square feet, representing 5.9 per cent of portfolio ERV (30 June 2023: 6.7 per cent). Further details are set
out in appendix 1.
Strong financial profile
We continue to maintain a strong balance sheet with a focus on resilience, flexibility and efficiency. There is
significant headroom against debt covenants and access to liquidity of approximately #500 million
comprising approximately #200 million of cash and #300 million of undrawn facilities. Group net debt was
#1.5 billion, representing an EPRA loan-to-value ratio of 30 per cent based on 30 June 2023 property
valuations (adjusted for disposals).
In August 2023, a #200 million 10-year secured loan was signed with Aviva Investors. The proceeds of the
loan were used to repay part of the #576 million unsecured facility reducing it to #376 million, maturing in
December 2024. We are in advanced discussions regarding a new medium-term bank loan, details of which
will be announced in due course.
All of the Group's drawn debt is at fixed rates or currently has interest rate protection in place. This caps
SONIA exposure at an average of 2.7 per cent on #500 million of notional value to December 2023 and #350
million of notional value capped at 2.3 per cent to December 2024. The weighted average maturity of drawn
debt is five years, and the weighted average cost of debt is 4.2 per cent, which reduces to an effective cash
cost of 3.3 per cent after taking into account interest income on cash deposits and the benefit of interest
rate hedging.
Sustainability and environmental stewardship
As a long-term, experienced and responsible investor, sustainability has always been an important aspect of
delivering our strategy. We are committed to reducing the impact of our operations on the environment,
whilst engagement and collaboration with our wide range of stakeholders is integral to our strategy and
values.
We adopt a "low-carbon, retrofit first" approach to future-proofing our heritage buildings, minimising
additional embodied carbon and air pollution which comes from demolition and construction, whilst
improving their energy performance at modest financial outlay. We estimate the cost of sustainability
improvements, included in our capex estimates, is on average approximately 0.1 per cent of portfolio value
annually. 78 per cent of our portfolio by ERV now has EPC ratings of A-C, and we target a minimum rating of
B on all new refurbishment projects.
We are committed to be Net Zero Carbon in our own operations (scope 1 & 2 emissions) by 2025, and across
the whole business (scopes 1, 2 &3 emissions) by 2030. The combined pathway will be published on our
website in due course.
Appendix 1
Leasing activity from 1 January 2023 to 15 November 2023
- 162 commercial lettings and renewals: #19.5 million of rent, 11 per cent above 31 December 2022
ERV
- 278 residential lettings and renewals: #10.7 million of rent, 11 per cent above previous passing
rents
New
Use Transactions contracted % above
rent Dec 22 ERV
(#m)
Retail 75 10.1 11
Hospitality & leisure 30 3.5 13
Offices 57 5.9 8
Residential 278 10.7 6
Total 440 30.2 9
In addition, 63 commercial rent reviews have been concluded, totalling #14.7 million, 9.6 per cent ahead of
previous passing rents.
Under offer
% of
Use portfolio Area
ERV ERV (#m) ('000 sq. ft.)
Retail 0.2 0.4 6
Hospitality & leisure 0.6 1.3 13
Offices 2.0 4.4 49
Residential 0.1 0.2 3
Total 2.9 6.3 71
Available-to-let space
% of
Use portfolio Area
ERV ERV (#m) ('000 sq. ft.)
etail 0.7 1.5 19
Hospitality & leisure 0.6 1.4 18
Offices 0.8 1.7 23
Residential 0.1 0.3 5
Total 2.2 4.91 65
1. Includes 14 units let on a temporary basis (ERV: #2.1 million).
Under refurbishment
% of
Use portfolio Area
ERV ERV (#m) ('000 sq. ft.)
Retail 1.1 2.5 22
Hospitality & leisure 1.6 3.8 70
Offices 2.7 6.1 82
Residential 0.5 1.1 22
Total 5.9 13.5 196
Appendix 2
2023 asset disposals to date
- 19 - 25 Long Acre & 28-29 Floral Street (Leasehold interest)
- 158 - 159 Drury Lane
- Walter House, 418-422 Strand (Leasehold interest)
- 61 Old Compton Street
- 103 Charing Cross Road
Enquiries:
Shaftesbury Capital
PLC +44 (0)20 3214 9150
Ian Hawksworth Chief Executive
Situl Jobanputra Chief Financial Officer
Director of Commercial Finance and Investor
Sarah Corbett Relations
Media enquiries:
UK: Hudson Sandler Michael Sandler +44 (0)20 7796 4133
UK: RMS Partners Simon Courtenay +44 (0)20 3735 6551
SA: Instinctif Frederic Cornet +27 (0)11 447 3030
About Shaftesbury Capital
Shaftesbury Capital PLC ("Shaftesbury Capital") is the leading central London mixed-use REIT and is a
constituent of the FTSE-250 Index. Our property portfolio, valued at #4.9 billion at June 2023, extends to 2.9
million square feet of lettable space across the most vibrant areas of London's West End. With a diverse mix
of restaurants, cafes, bars, shops, residential and offices, our destinations include the high footfall, thriving
neighbourhoods of Covent Garden, Carnaby, Soho and Chinatown, together with holdings in Fitzrovia. Our
properties are close to the main West End Underground stations and transport hubs for the Elizabeth Line.
Shaftesbury Capital shares are listed on the London Stock Exchange (primary) and the Johannesburg Stock
Exchange (secondary).
Our purpose
Investing to create thriving destinations in London's West End where people enjoy visiting, working, and
living.
Forward-looking statements
This press release contains "forward-looking statements" regarding the belief or current expectations of
Shaftesbury Capital PLC, its Directors and other members of its senior management about Shaftesbury
Capital PLC's businesses, financial performance and results of operations. These forward-looking statements
are not guarantees of future performance. Rather, they are based on current views and assumptions and
involve known and unknown risks, uncertainties and other factors, many of which are outside the control of
Shaftesbury Capital PLC and are difficult to predict, that may cause actual results, performance or
developments to differ materially from any future results, performance or developments expressed or
implied by the forward-looking statements. These forward-looking statements speak only as at the date of
this press release. Except as required by applicable law, Shaftesbury Capital PLC makes no representation or
warranty in relation to them and expressly disclaims any obligation to update or revise any forward-looking
statements contained herein to reflect any change in Shaftesbury Capital PLC's expectations with regard
thereto or any change in events, conditions or circumstances on which any such statement is based. The
information contained in this press release does not purport to be comprehensive and has not been
independently verified.
Any information contained in this press release on the price at which shares or other securities in Shaftesbury
Capital 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. No statement in this press release is intended to be a
profit forecast and no statement in this press release should be interpreted to mean that earnings per share
of Shaftesbury Capital PLC for the current or future financial years would necessarily match or exceed the
historical published earnings per share of Shaftesbury Capital PLC.
Certain industry and market data contained in this press release has come from third party sources. Third
party publications, studies and surveys generally state that the data contained therein have been obtained
from sources believed to be reliable, but that there is no guarantee of accuracy or completeness of such data
27 November 2023
Sponsor
Java Capital
Date: 27-11-2023 09:00:00
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