Capital & Counties Properties Plc, the London developer that owns most of the city’s Covent Garden district, said first-half profit declined 21 percent as property sales cut rental income.
Adjusted earnings before asset revaluations and one-time items dropped to 4.8 million pounds ($7.4 million) or 0.6 pence a share, from a restated 6.1 million pounds, or 0.9 pence, a year ago, the company known as CapCo said in a statement today. Net rental income fell to 32.2 million pounds from a restated 34.1 million pounds.
The rental income decline was due to sales of assets held by CapCo’s joint venture with Great Portland Estates Plc, known as the Great Capital Partnership, and a weaker performance of its events and conference venue rental business, according to the statement.
CapCo owns more than 50 properties in and around Covent Garden, including Europe’s largest Apple computer store, according to the company’s website. In 2007, CapCo started a partnership with Great Portland Estates for developing offices in London’s West End district, one of the world’s most expensive business locations. The venture agreed to sell its last asset, an office and residential property near Regent’s Park, last month.
CapCo rose 12.4 pence, or 3.6 percent, to 358.2 pence in London trading, the most since Feb. 28. The shares have gained about 48 percent this year, the fifth-best performance among the 59 stocks in the Bloomberg EMEA Real Estate Index, which has advanced 7.7 percent.
Property gains at Covent Garden helped lift net asset value about 15 percent to 1.8 billion pounds, or 232 pence a share. The district is seeing strong demand from retailers and 12, including Dior and Shake Shack, signed leases in the first half, the company said. The Covent Garden estate had a market value of 1.1 billion pounds in first half, from 952 million pounds at the end of 2012.
CapCo plans to pay a dividend of 0.5 pence a share for the first half.
“The volatility within the capital markets over the past few months illustrates the continued uncertainty of the macroeconomic outlook,” the company said in the statement. “Nevertheless, demand for prime assets within central London continues to be very strong.”
The developer plans to continue adding homes to the Covent Garden area, with two luxury apartment buildings under construction and due to be sold in 2014.
CapCo, which earns most of its profit by renting out retail and event space, is adding homes to benefit from rising prices in London, low interest rates and U.K. government incentives to make it easier for people to buy a residence. The company said in a July 18 statement that it plans to build 7,500 homes at Earls Court in the southwest corner of central London.