Covent Garden landlord slashes property value again as pandemic weighs

By

Nigel TAYLOR

Published
Feb 3, 2021

Stores closed, no tourists. That pandemic-induced combination has meant one of London’s leading retail attractions, Covent Garden, continues to suffer more than most.

So much so, the area’s leading retail landlord, Capital & Counties Properties (CapCo), said the value of its retail estate has been slashed for a second time in 12 months.

The landlord said the value of the Covent Garden estate was down a further 13% for the six months between 30 June-31 December. That’s on top of the 17% dip recorded for the previous six months.

Overall, the Covent Garden properties’ value was cut by 27% to £1.8 billion, or by £400 million, last year as central London continued to be hit particularly hard by the devastating effects of the coronavirus.

That’s understandable when retail, leisure and food and beverage accounts for 75% of its estate portfolio.

CapCo also said it had only collected 42% of the rent due for the first quarter of 2021 and had made alternative arrangements for all but 6% of the remainder. That mirrors the collection figure posted in the previous quarter.

Meanwhile, the group’s lenders have also granted waivers on some loan agreements for the year through December. However, the company said its property values could fall by a further 68% before it breaches loan-to-value covenants.

But despite the downbeat numbers, CapCo continues to concentrate on the (albeit limited) positives.

"While there are significant near-term challenges to trading and an uncertain economic outlook due to the impact of the pandemic, we are encouraged by the enduring appeal of Covent Garden for customers as evidenced by recovery in footfall and trade following easing measures in the second half of 2020”, CapCo CEO Ian Hawksworth said in a trading statement.

Central London retail landlords had mostly been spared the UK’s retail downturn prior to 2020 as international tourists and office workers kept footfall and sales high. 

But that was abruptly halted when the pandemic hit last March with tourist numbers plunging and most workers staying home. Just how quickly post-pandemic shopper numbers build will be a key concerm for landlords, and retailers, over the coming year.