Over concentration of the portfolio, execution risk and a cyclical downturn in the market – take your pick. The upshot is that Capital & Counties (CAPC) has been forced to take another hit on the value of its Earls Court interests. The £52m write-down, taking the value of the assets to £707m, reflects a stalled London property market. That is certainly true of high-end apartments, though the overall value of the landlord’s portfolio was down by a modest 0.4 per cent, as its Covent Garden interests were marked up amid a rising rental roll. The compensatory effects of the latter locale also meant that ‘CapCo’ was able to maintain its NAV per share at 334p and a half-year pay-out of 0.5p per share, in line with the comparable period in 2017.
Shareholders can also take heart from news that the second phase of Earls Court’s Lillie Square scheme has seen over 80 per cent of flats exchanged or reserved. CapCo also successfully hived off the Empress State Building for £250m in March, which represents a £30m premium to the year-end valuation.
JPMorgan Cazenove ascribes a target price of 270p based on a total returns-based valuation model.
|CAPITAL & COUNTIES PROPERTIES (CAPC)|
|ORD PRICE:||285.6p||MARKET VALUE:||£ 2.43bn|
|TOUCH:||285.5-285.8p||12-MONTH HIGH:||321p||LOW: 252p|
|DIVIDEND YIELD:||0.5%||DEVELOPMENT PROP:||nil|
|DISCOUNT TO NAV:||14.6%|
|INVESTMENT PROP:||£3.43bn||NET DEBT:||17%|
|Half-year to 30 Jun||Net asset value (p)||Pre-tax profit (£m)||Earnings per share (p)||Dividend per share (p)|