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Capco sees value of Covent Garden property empire fall

Covent Garden landlord Capco has said footfall in the West End is improving daily, but warned it is too early to predict when trading for tenants will return to pre-Covid levels.

Chief executive Ian Hawksworth told the Evening Standard he has been encouraged since shops and restaurants reopened. He said “every day is better than the last one”, in terms of footfall, and last week around 500,000 people visited the estate.

Hawksworth was speaking as the company showed how the virus crisis hit the business in the six months to June 30.

Like landlords across the UK, Capco saw tenants in the hospitality sector have to close sites in March for the Covid-19 lockdown, impacting the ability of some occupiers to pay rent.

The property firm said net rental income was down 41% to £18 million in the first half of the year, against June 2019.

During the period it worked with businesses on terms to help them ride out the virus crisis, including rent deferrals and rent-free periods for some. For certain tenants who are experiencing short-term cash flow issues, rental agreements will be linked to turnover for the second half of the year.

The value of the Covent Garden estate dropped 17% to £2.2 billion, from £2.6 billion as at December 31.

Capco today said it began the year with a strong leasing pipeline and growth in tenant sales and footfall, however activity levels were significantly affected by the pandemic.

Non-essential retailers were allowed to reopen from June 15, while pubs and restaurants could welcome back customers from July 4. However, numerous businesses in London have seen weak footfall due to less tourists being in town, and office workers continuing to do their jobs at home.

Capco said it is implementing a number of marketing initiatives and working with stakeholders to promote Covent Garden and the West End, encouraging a return of footfall to normal levels over time.

It added that the majority of retail and hospitality customers on the estate have now reopened.

The company said: “Whilst initial indicators are encouraging, the trading environment remains challenging and it is too early to predict when trading will return to previous levels whilst physical office occupancy remains significantly reduced, and with the ongoing travel restrictions and fragile consumer sentiment.”

Hawksworth said: “There remain many challenges and an unpredictable economic environment however Capco is confident in the long-term prospects of the West End and the value of its unique investments."

Capco in June agreed to buy a £436 million stake in neighbouring landlord Shaftesbury.

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