Capco has exchanged contracts for the sale of its interests in Earls Court, excluding Lillie Square, to APG and Delancey (on behalf of its client fund) for £425 million.
This transaction is consistent with Capco’s strategy of monetising investments at Earls Court over time with a focus on growing its central London property investment business, centred around Covent Garden. Completion of the transaction is expected to take place before the end of November 2019.
The disposal to APG and Delancey’s client fund is for total consideration of £425 million, on a cash-free and debt-free basis which compares to a balance sheet value at 30 June 2019 of £508 million.
Payments will be made to Capco on a phased basis, with 45 per cent payable on completion and the balance over two years. Net proceeds from the initial payment are expected to be approximately £156 million (adjusting for net debt, transaction-related costs and other completion items). The balance of £211 million will be payable in two equal instalments,12 months and 24 months after completion.
On a pro forma basis as at 30 June 2019 following the disposal, Capco’s loan to value is reduced from 19 per cent to 15 per cent with cash and undrawn facilities of over £900 million. This position will be enhanced further as deferred consideration is received. Net proceeds will be used to repay debt where appropriate or held as cash balances pending redeployment.
Ian Hawksworth, Chief Executive of Capco, commented: “Having prepared Earls Court for future development, we are now pleased to have agreed terms for the sale of our interests to APG and Delancey (on behalf of its client fund), an experienced real estate investment partnership which, with the support of TfL will take forward this important scheme for London.
Following the disposal, Capco will be a strongly-capitalised property investment business centred around our landmark Covent Garden estate. The business is well-positioned to generate attractive long-term returns for shareholders. Backed by a strong balance sheet and with a significant investment pipeline, our access to substantial liquidity will enable us to capitalise on opportunities.”