Shaftesbury Capital has sold a quarter of Covent Garden to Norwegian oil fund Norges for £570m in the latest bet by Noway’s sovereign wealth fund on the capital.
Under the terms of the contract, Norges Bank Investment Management (NBIM) will buy a 25 per cent non-controlling stake in the £2.7bn Covent Garden estate, which Shaftesbury will continue to manage.
“This investment underscores our belief in the strength of London with the portfolio complementing our other high quality West End investments,” Jayesh Patel, head of UK real rstate at NBIM, said.
The £1.3 trillion Norwegian sovereign wealth fund completed a similar deal with Grosvenor earlier this year, snapping up a £306m – 25 per cent – stake in its historic Mayfair estate in London.
“Covent Garden is one of the world’s most recognised retail, leisure and cultural destinations and we look forward to supporting Shaftesbury Capital’s management team, with their strong track record of delivering the growth potential of this prime West End estate,” Patel added.
As well as Grosvenor and now Shaftesbury, NBIM owns a stake in Regent Street as well as Pollen Estate, near Saville Row.
NBIM has increased its exposure to real estate and diversified its portfolio in light of “market challenges” from Covid-19 and rising real rates.
A ‘positive step’ for Shaftesbury
Peel Hunt analysts called the deal a “very positive evolution” for Shaftesbury, reiterating its ‘Buy’ rating.
“Not only is this a strong endorsement of the assets, and their valuation, it is very positive for the Shaftesbury Capital equity story,” analysts Matthew Saperia and James Carswell said.
Analysts at Panmure Liberum agreed that the deal was a “positive step” for Shaftesbury, helping to de-leverage the balance sheet.
Shaftesbury will initially use the proceeds of the sale to partially repay a term loan, and repay the £275m exchangeable bond “in due course”.
The company’s share price rose more than 10 per cent in early trades.
