LONDON (ShareCast) - (ShareCast News) - Capital & Counties Properties is on track to hit its estimated rental value target of £100m at Covent Garden by December next year as leasing activity has been positive.
In a trading update for 1 July to 28 November, the FTSE 250 property developer said that year-to-date Covent Garden has set a new record for leasing activity, with 84 leases transacted representing £11.2m of income.

Over the period, the leasing market has continued to be very active with new leases and renewals representing £2m of income signed at levels ahead of 30 June 2016 ERV and a number of further transactions under offer.

Chief executive Ian Hawksworth said: "Whilst 2016 has been characterised by uncertainty in the London market, we have continued to introduce excellent brands, set new rental tones and seen the successful transformation of the Royal Opera House Arcade. We have also expanded our estate further on Southampton Street, a key access point to the Piazza.

"At Earls Court, we continue to de-risk our land holdings and have completed the first phase of demolition of the former Earls Court Exhibition Centres to ground level. Construction of Phase 1 at Lillie Square nears completion and we are on track to welcome our first residents in the coming weeks."

Capco said Hotel Chocolat was its latest new signing to the Market Building at Covent Garden and sets a new Zone A rental level of £650 per square foot.

Meanwhile, the first phase of demolition of the former Earls Court Exhibition Centres to ground level has completed on schedule. Demolition to basement level will begin shortly, further de-risking the site and enabling the land for future development. This final phase of demolition is expected to take 12 months and cost around £40m.

Capco said it is in a strong financial position, with a conservative loan-to-value of 20% and more than £500m in cash and available facilities.

Numis upgraded its stance on Capco to 'add' from 'hold' and lifted the price target to 307p from 273p "in spite of the limited new news" in the statement, saying the current share price overstates the risks for the company. In particular, it sees the implied valuation of the land at Earls Court of around £18m/acre as too low.

"We may not have any visibility on any discrete catalysts over the next 6-12 months, but solid progress is being made at Covent Garden and Earls Court is moving forward," it said.

At 0905 GMT, the shares were up 2.4% to 270.60p.

Email this article to a friend

or share it with one of these popular networks:

• DIGG
• FACEBOOK
• STUMBLEUPON
• MIXX
• YAHOO BUZZ
• DELICIOUS
• REDDIT
• NEWSVINE