Goodbye Capco; hello Shaftesbury Capital

Capital & Counties (CAPC) shareholders need no longer ask themselves whether the company is a good investment on its own, but rather how it will fare following a merger with Shaftesbury (SHB). The deal completed on 6 March and trading in the new business, Shaftesbury Capital (SHC), began the day after.

Capco’s results for the last calendar year are therefore its last, and the outlook for the new company is mixed. Shaftesbury swung to a profit in its last set of results for the year to 30 September thanks to a valuation boost, but Capco has swung to a loss in its results for the last calendar year thanks to a valuation slump. Timing is be a factor here with the mini-Budget-induced property turmoil having only just hit at the time of Shaftesbury’s results and having had three months to shake up the market before Capco’s results.

Shaftesbury was increasing rental income and decreasing vacancy at the time of its last results and it is a similar story for Capco. It has increased its gross profit – its rental income less the costs of running the portfolio – by 43 per cent to £57.3mn from £40mn in 2021. Rent collection is also back up to the pre-pandemic levels of 99 per cent and the increased dividend shows it is confident about the future.

It all sounds promising, but how the combined company will work without Shaftesbury’s top team at the helm is unknown. Hold.

Last IC view: Sell, 146p, 2 Aug 2022