The value of Capital & Counties’ Earls Court estate has been written down by £200m to £1.2bn and the slow rate of sales of its luxury flats has continued.
The company said the 14.3% like-for-like drop in the value of Earls Court, reported in half year results, reflected “valuers’ assessment of the weakened sentiment in the central London residential market following the EU referendum.”
Capco’s chief executive Ian Hawksworth said the change in valuation was due to valuers’ views on appetite for development land following the Brexit vote, and was not directly linked to the rate of flat sales, which have slowed sharply at Earls Court as they have across the luxury residential market.
Of the 70 units that were released for phase two of Capco’s Lillie Square scheme at Earls Court in September last year, 41 have been reserved or exchanged.
“Whilst the level of enquires has been strong since the beginning of the year, the rate of sales has been slow with the uncertainty in the weeks leading up to the EU referendum impacting buyers’ decision-making,” said Capco.
More positively, sales prices have been above the levels seen in phase one and four flats have been reserved or exchanged since the EU referendum. No other flats were reserved or exchanged during the past quarter.
Hawksworth downplayed the slowdown, saying off plan sales representing 20% to 40% of schemes were historically the norm.
“The off plan sales rates we saw in 2014 were abnormal,” he said.
The continued strong performance of the company’s Covent Garden holdings, where like for like estimated rental values increased 4%, was not enough to compensate for the weakness at Earls Court.
The valuation of the group’s total property holdings dropped 4% and adjusted EPRA net asset value fell by 5% to 344p a share.
Capco’s share price slumped 4.8% by mid-morning.
Capco also confirmed that it had decided not to sell events venue London Olympia in Kensington after a strategic review. Whilst not “a long-term core holding”, it offers “a reliable and growing income stream,” the company said. The valuation remained unchanged at £295m.
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