Shaftesbury Capital's London portfolio thrives with increased valuations and leasing demand

Shaftesbury Capital, the JSE and London-listed REIT grew earnings, dividends, and valuation in the six months to June 30 after its properties in the iconic Covent Garden and Carnaby Street precincts continued to grow sales.

"We are delighted to deliver continued strong performance. Our West End portfolio continues to be busy and vibrant with high footfall and seven days a week trading,” said the CEO Ian Hawksworth on Tuesday.

Leasing demand was strong, with 193 transactions completed, 9% ahead of December 2024. Valuations increased by 3%, driven by ERV (estimated rental value) growth and stable yields.

He said that they had entered the second half of the year with positive momentum, supported by a strong balance sheet and access to liquidity.

The 193 leasing transactions represented £19.2 million of contracted rent, 9% ahead of December 2024 ERV and 16.3% ahead of previous passing rents.

Occupancy was higher with 2.4% of ERV available to let, with positive trends in footfall and customer sales in aggregate across the West End portfolio.

There was a 16% growth in underlying earnings to 2.2 pence per share, and the interim dividend increased to 1.9 pence per share from 1.7 pence at the same time year.

The portfolio valuation increased by 3.1% to £5.2 billion, driven by a 2.9% like-for-like increase in ERV to £261m, with the equivalent yield stable at 4.46 per cent.

Some £71m went to capital expenditure and acquisitions. In April, a £2.7bn long-term partnership with Norges Bank Investment Management, the Norwegian sovereign wealth fund, in respect of the Covent Garden estate, was concluded.

The fund acquired a 25% non-controlling interest in the Covent Garden estate, in line with the December 2023 valuation.

“The positive characteristics of our portfolio provide confidence in our target of 5% to 7% rental growth which, with stable yields, would result in total accounting returns of 8% to 10% over the medium term,” Hawksworth said.

Market rent for the portfolio of over 600 buildings was 25% higher than current passing rent, resulting in significant upside potential in rental income through leasing and asset management activity.

“Customer sales... are about 30% ahead of pre-pandemic levels; however, retail ERVs are still 2% below 2019 levels. Based on our consumer data and experience, average spend and dwell time have the potential to be significantly higher in areas of our portfolio,” the group said.

Shaftesbury Capital’s portfolio extends to 2.7 million square feet of lettable space across the most vibrant areas of London's West End. With a diverse mix of shops, restaurants, cafés, bars, residential apartments, and offices, the destinations include the high footfall neighborhoods of Covent Garden, Carnaby, Soho, and Chinatown.

Successful openings in the Covent Garden portfolio included Nespresso and Dolce & Gabbana. Running and lifestyle brand Saucony opened a store on James Street, joining Swatch, the global watchmaker, which relocated to a larger unit on James Street.

A number of experience-led brands had been added, including luxury activewear brand Alo Yoga and Swedish outdoor specialist Thule, which have opened on Neal Street.

On Carnaby Street, Tala opened its first UK store delivering activewear, Farm Rio opened its first dedicated store in the West End, and Pureseoul, a leading UK-Korean beauty retailer, launched its largest flagship, offering over 30 exclusive brands and a large K-Beauty collection.

US shoe brand Autry debuted its first UK store on Beak Street. Make-up, fragrance, and skincare retailer Charlotte Tilbury will open a new flagship later this year.

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