Capco acquires full control of Empress State Building

The Empress State Building is a skyscraper office building located adjacent to the Earls Court and West Kensington Opportunity Area.

London Stock Exchange and the JSE Listed campany, Capital & Counties Properties has acquired control of 100% of the Empress State Building having exchanged contracts with Land Securities Group for the 50% not already owned for a price of £117m.

The Empress State Building is a 451,000 sq ft, 31 storey, office building located adjacent to the Earls Court & West Kensington Opportunity Area.

Capco investment director Gary Yardley said the building provided “an attractive income stream until 2019 whilst offering a number of options to create further value over the medium term as the area benefits from the implementation of the Earls Court Masterplan”

It is fully let to the Mayor's Office for Policing and Crime until June 2019, with annual rental uplifts indexed to RPI with a floor of 2% and cap of 5.25%. The current rent passing is £14.9m. The purchase price represents an initial yield of 6.2% and an equivalent yield of 6%.

In the medium-term, opportunities to extend or review the existing lease will be considered or alternatively the property may be suitable for a residential conversion in line with the plans for the Earls Court Masterplan.

The price of £117m will comprise a cash payment and the assumption of Land Securities' share of the existing £131m debt facility, which will remain in place until maturity in August 2013. A new five year debt facility is currently under negotiation.

A new five-year debt facility was under negotiation.

Capco’s core portfolio consists of Covent Garden — a retail‚ leisure and residential district in London‚ and the mixed-use Earls Court & Olympia‚ also in London.

Scott Parsons‚ head of property in London at Land Securities‚ said the sale of the Empress State Building “fits our strategy of recycling capital through disposals where we do not see an opportunity for full control of the asset management or development of the site”.

Earlier in the year‚ Capco reported a “strong performance” for the year ended December‚ driven by the increased valuations of its assets as the company continued to “unlock value” from its properties.

Capco reported a total return of 23% for the period‚ with 22% growth in adjusted net asset value per share the main contributor to this rise.