Shaftesbury Capital reports strong leasing activity since merger
By Josh White
Date: Thursday 23 May 2024
(Sharecast News) - Shaftesbury Capital reported strong leasing activity and a robust financial profile in an update on Thursday.
The FTSE 250 real estate investment trust, which was holding its annual general meeting, said it had completed 147 leasing transactions generating £22.4m in new contracted rent, 7% ahead of December's estimated rental value (ERV) and 16% above previous passing rents.
Its portfolio vacancy rate was low, with 2.5% of ERV available to let, and an additional 2.9% under offer, resulting in a total EPRA vacancy of 5.4%.
Shaftesbury said it had introduced 23 new brands, including Pangaia, Alo, Elemis, Ergon House, and the Little Violet Door, to its West End portfolio.
Retail and hospitality demand had been strong, with notable signings such as Charlotte Tilbury's flagship store and Alo's new location in Seven Dials.
Other significant additions included Elemis's debut London store, Axel Arigato's flagship store, and Ergon House's boutique hotel.
The company said its office portfolio was also performing well, achieving rents of over £100 per square foot.
Major schemes at 68-72 Broadwick and the Floral were now let or under offer.
Its residential portfolio was also showing a strong performance with minimal vacancy, while 24 commercial rent reviews had been concluded, totaling £8.3m, 4% ahead of previous passing rents.
In terms of capital activity, Shaftesbury had completed £212.6m in asset disposals since the merger, reinvesting £82.9m in target acquisitions.
Significant transactions included the acquisition of freehold interests in 25-31 James Street, Covent Garden for £75.1m, and two assets on Broadwick Street and Marshall Street for £7.8m.
The company said it had over £500m in liquidity from undrawn bank facilities and cash, with group net debt at £1.45bn, representing a 30% EPRA loan-to-value ratio.
Its weighted average cash cost of drawn debt was about 4%, which reduced to an effective cash cost of 3.4% considering interest income on cash deposits and the benefit of interest rate hedging.
All of the group's drawn debt was at fixed rates or had interest rate protection in place until the end of 2025.
Shaftesbury Capital also noted that its first EPRA Sustainability Data Report had been published, underscoring its commitment to sustainability.
The company said it remained optimistic about future growth, supported by its strong leasing momentum, low vacancy rates, and strategic capital recycling.
"It's been a positive start to the year, our West End estates are busy and vibrant with high footfall, customer sales growth and increasing levels of international tourism," said chief executive officer Ian Hawksworth.
"There is continued strong leasing demand across all uses with 147 transactions completed in the period, at rents on average seven per cent ahead of December 2023 ERV and an excellent leasing pipeline, reflecting the appeal of our exceptional portfolio."
Hawksworth said the company had completed £213m of asset sales since the merger at a premium to valuation, reinvesting over £80m in target acquisitions.
"Backed by our strong balance sheet and talented team, Shaftesbury Capital is well-positioned to deliver growth in line with our medium-term targets as the leading central London mixed-use REIT."
At 1020 BST, shares in Shaftesbury Capital were down 0.63% at 141.2p.
Reporting by Josh White for Sharecast.com.
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