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Capital and Counties rental income plummets

The Covent Garden landlord collected less than half rent due for the second and third quarters
August 12, 2020

The magnitude of the decline in the value of Capital and Counties’ (CAPC) portfolio during the first half of the year lays bare how much weaker the rent prospects have become for retail and leisure in London’s West End. The landlord collected just 44 per cent of rent due for the second quarter and has so far received just 30 per cent of the third quarter amount due.

IC TIP: Sell at 136p

A 16 per cent like-for-like fall in the valuation of the portfolio meant the group’s loan-to-value ratio rose to 32 per cent, from just 16 per cent at the end of last year. The core Covent Garden portfolio would need to decline by 40 per cent before the associated covenant on its debt facilities is breached, but it is worth noting that those assets plunged 17 per cent in the first six months of the year alone. A covenant waiver has already been agreed on the interest cover covenant until December this year, in light of falling rental income, which declined by 41 per cent during the period. 

Panmure Gordon forecasts adjusted net assets of 214p a share at the end of December, falling to 203p the same time next year.

CAPITAL AND COUNTIES (CAPC)   
ORD PRICE:136pMARKET VALUE:£ 1.16bn
TOUCH:136-137p12-MONTH HIGH:275pLOW: 131p
DIVIDEND YIELD:0.7%TRADING PROP:nil
DISCOUNT TO NTAV:44%  
INVESTMENT PROP:£2.1bnNET DEBT:35%
Half-year to 30 JunNet tangible asset value (p)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
2019* 315-8.5-10.20.5
2020241-441-51.6nil
% change-23---
Ex-div: na   
Payment: na   
*Refers to NAV