Capco to convert to UK REIT after Earls Court disposal

Capital & Counties (Capco) said it will convert to UK real estate investment trust status before the end of the year after the £425m sale of its interests in Earls Court, .

The property investment business said its estate, centred around London's Covent Garden, is well-positioned to deliver rental growth amid strong demand for office and residential space, along with high occupancy and rates of renewal.

Capco said the West End offered "insulation from the well-documented wider retail challenges" but was not immune from issues posed by Brexit and cost pressures.

"Nevertheless, trading performance on the estate remains encouraging with footfall growth and average tenant sales continuing to trend upwards," the company added.

Meanwhile, the FTSE 250-listed business also said it had acquired the freehold interests of 5-6 Henrietta Street and Sussex Mansions, 36-39 Maiden Lane for a combined total of £51.8m.

The two buildings produce annual rental income of approximately £1.8m and currently feature rented restaurant spaces.

The company said it remained well positioned to capitalise on further investment opportunities due to the financial flexibility afforded by its approximately £900m of cash and undrawn facilities, while also adding that it will now target a "progressive dividend policy".

Capital & Counties shares were up by 0.12% at 242.70p at 0948 GMT.