It is intended that the merger will result in Capco owning 100% of the issued share capital of Shaftesbury on completion. As a result, Shaftesbury shareholders will own 53% of the combined group and Capco shareholders will own 47%.
Capco already holds 96,971,003 Shaftesbury shares, approximately 25.2% of its issued share capital.
The combined group will be called Shaftesbury Capital on completion.
The merger is supported by Norges Bank of Norway, a substantial shareholder of Capco and Shaftesbury, and Madison International Realty Holdings, LLC, a shareholder of Capco.
The combined real estate companies are located in some of the most iconic parts of London’s West End, and will have collective portfolio valued at around £5bn, annualised gross income of approximately £165.5m and an estimated rental value of £218.0m.
The combined portfolio will comprise approximately 670 mostly freehold buildings with around 2.9m square feet of lettable space across approximately 2,000 commercial and residential units.
At 31 March 2022, the combined group’s portfolio comprised 35% retail (£1.7bn); 34% hospitality and leisure: (£1.7bn); and 31% offices and residential (£1.6bn).
The portfolio is located in a number of vibrant, high-profile and high-footfall destinations across London’s West End including Covent Garden, Carnaby, Chinatown and Soho, close to its major cultural and entertainment attractions, employment locations and transport hubs.
The combined group will provide a 'rare opportunity' in the listed real estate sector to invest in an 'exceptional' mixed-use portfolio in the heart of central London.
The group management team will take a 'best of both' approach to operations, combining the companies’ strengths, cultures, values, operating and investment models.
Benefits over the long term include incremental asset management opportunities, delivery of a dynamic leasing and marketing strategy across the portfolio, enhanced connectivity of adjacent locations, and synergies for long-term income, earnings and value growth for shareholders.
The group will be led by Jonathan Nicholls as non-executive chairman and Ian Hawksworth as chief executive. Situl Jobanputra will be the chief financial officer and Chris Ward will be the chief operating officer.
“The merger of Shaftesbury and Capco unites two complementary and adjacent real estate portfolios under single ownership,” says Nicholls.
“Shaftesbury Capital will own a first-class portfolio in some of the most iconic destinations across London’s vibrant West End. The experienced leadership team, with their impressive track record of innovation and curation, should ensure a sustainable and prosperous future for our destinations, the communities they serve and our wider stakeholders.
“With cost and operational synergies, a strong corporate governance framework, increased scale and greater equity market liquidity, the combination also provides a firm foundation for future value creation for our shareholders.”
Four Shaftesbury directors, Richard Akers (as the senior independent director), Jennelle Tilling, Ruth Anderson CVO and Helena Coles join the board of the combined group and two current Capco directors, Charlotte Boyle and Anthony Steains, remain in place.
An executive committee, responsible for the day-to-day management and operation of the group, will comprise six members. The chief executive, CFO and COO will be joined by Capco’s Michelle McGrath, responsible for the enlarged Covent Garden portfolio including Capco’s Covent Garden assets as well as Shaftesbury’s assets in Seven Dials, Opera Quarter and Coliseum.
Shaftesbury’s Andrew Price will be responsible for the Carnaby, Chinatown, Soho and Fitzrovia portfolios; and Shaftesbury’s Samantha Bain-Mollison responsible for leasing.
After 36 years at Shaftesbury, including 11 years as chief executive, Brian Bickell will retire on completion. Executive directors Simon Quayle and Tom Welton will also leave the business.
Henry Staunton, Capco’s chairman who has served on the Capco Board for 12 years, will also retire on Completion.
“The proposed merger is an exciting opportunity to bring together two exceptional property portfolios in London’s vibrant and thriving West End,” says Hawksworth.
“By combining the creativity and knowledge of our talented and experienced management teams to deliver sustained income and value growth Shaftesbury Capital aims to become a leading central London mixed-use REIT.”