Two major London commercial landlords are in advanced discussions over a £3.5 billion ($4.32 billion) merger, Sky News reports.
Capital & Counties Properties Plc, also known as Capco, and Shaftesbury Plc own large chunks of prime London real estate, including landmarks such as Chinatown and Covent Garden. The proposed merger would create a powerhouse in the London property market.
Talk of a merger between the two companies has been rife ever since May 2020, when Capco bought property tycoon Samuel Tak Lee’s 26% stake in Shaftesbury for £436m ($535m). Speculation over a potential deal was also driven by the large stake Norway’s sovereign wealth fund Norges Bank holds in both firms.
The move comes at a time when London’s property market is starting to recover from the heavy wounds inflicted by the Covid-19 pandemic. Companies such as Capco and Shaftesbury with major holdings in popular tourist destinations were hit particularly hard by the crisis, with many prominent stores closing and landlords forced to provide rent relief to those able to stay in business.
In recent months though the lifting of restrictions has seen larger number of tourists along with increased footfall overall. Both Capco and Shaftesbury have reported improved demand for leasing.
“We are pleased with the strong level of leasing demand for Covent Garden which has contributed to a valuation uplift in the second half,” Ian Hawksworth, Capco chief executive, said in February.
“With footfall continuing to increase, customer sales approaching 2019 levels and our creative approach, Covent Garden is the most vibrant district in the West End and is well-positioned for further rental growth.”