Covent Garden luxury boosts CapCo

The company’s properties in Covent Garden are now worth £1.1bn. The market has helped, but shop rents in and around the famous piazza have been racing well ahead of the West End average. The estimated rental value (ERV) of the estate - the amount of annual rent it would generate if all leases were marked to market - is now £55.9m, up 6.9 per cent since December. The estimated value only rose 4.2 per cent in the whole of 2012, so the valuers may be partly making up for last year’s excessive caution. Nonetheless, CapCo’s initiatives to drive the Covent Garden retail offering upmarket are clearly working. Its latest coup is attracting Dior, which has agreed to pay a record rent for the north range of the market building with an upcoming "luxury beauty concept store".

Measured by milestones in the land-assembly and planning processes, progress at Earls Court has been just as significant, if less financially tangible. CapCo bought the half of the Empress State Building it did not already own from Land Securities (LAND) and, more importantly, agreed to form a joint venture with Transport for London, which owns the freehold of the exhibition sites.

Broker Investec increased its forecast for year-end adjusted NAV to 264p.