UK property manager Capco has come in for a 26 per cent stake in London-focused property firm Shaftesbury for £436m.
Capco has bought the stake from a trust set up by Hong Kong tycoon Samuel Tak Lee for 540p per share, representing a discount of 13.9 per cent to the closing Shaftesbury share price on 29 May.
Ian Hawksworth, chief executive of Capco, said: “As long-term investors in the Covent Garden estate and the West End, the investment in Shaftesbury represents a unique opportunity to deploy our capital in an exceptional portfolio at an attractive entry price, which we believe will generate long-term value for Capco shareholders.
“Capco’s world-class estate, strong balance sheet and significant financial flexibility ensure that the company is well positioned. Whilst we can expect continued market uncertainty in the near term, we are confident about the long-term fundamentals and prospects for the West End and prime central London.”
Shaftesbury said it “looks forward to engaging with Capco as it would with any other shareholder in the company”.
Capco said it believed the deal was attractively valued, “with an implied price of approximately £1,200 per square foot and a yield of 3.3 per cent based on Shaftesbury’s 2019 total dividend of 17.7p per share”.
Capco said it was funding the investment through the £705m Covent Garden revolving credit facility, of which £255m remains available for drawdown.
In the light of the deal, Capco said it has decided not to complete the return of £100m to shareholders through the share buyback programme announced earlier this year, under which £12m had been returned to shareholders prior to being suspended in March 2020.
Tak Lee has repeatedly clashed with Shaftesbury’s management after feeling he was left in the dark over a 2017 share placing.
Today Shaftesbury said Tak Lee has withdrawn legal proceedings against the company related to the 2017 fundraising.
In January Tak Lee voted against resolutions to reappoint some of the company’s key management figures including chief executive Brian Bickell, finance director Chris Ward and chairman Jonathan Nicholls.
Rothschild & Co is acting as lead financial adviser and sponsor to Capco on the transaction, BofA Securities is acting as financial adviser and Herbert Smith Freehills is acting as legal adviser.
Capco shares rose 1.5 per cent to 166p and Shaftesbury shares fell 1.5 per cent to 617p.