Covent Garden Capco is a popular shopping and tourism facility that attracts premium brands. Photo: Capco website

Two luxury real estate landlords in London plan to merge their operations, which will give local investors a significant impact on the British real estate industry.

On Monday, Capital & Counties Properties (Capco), which was spun off from Liberty International in 2010, said it was considering a merger with Shaftesbury, which owns 600 properties in London’s West End.

Capco said that if the proposed merger takes place, it will own 47% of the combined company. The rest of the company will be owned by other Shaftesbury shareholders. Capco currently owns a 25.2% stake in Shaftesbury. Their respective shares in the combined company were determined by the assets of the companies and the market capitalization.

“Subject to such conditions, it is currently assumed that the possible merger will be structured as a acquisition of Shaftesbury by Capco,” Capco said in a statement.

The merger will create the Real Estate Investment Trust Company (REIT), a London-based West End with a portfolio of around 2.9 million square feet of rental space.

About 1.8 million square feet are retail and hotel space, and the rest are office and residential space.

Capco owns luxury real estate worth £ 1.7 billion (Rs 33.8 billion) in London’s Covent Garden, a popular shopping and tourist destination that continued to feel high demand for leasing even during the pandemic. This turned out especially well in the second half of 2021.

Shaftesbury owns properties grouped mainly in Carnaby, Seven Dials and Chinatown, as well as in Covent Garden, Soho and Fitzroy.

Capco said Norges Bank, a major shareholder in both Shaftesbury and Capco, has also shown its support for the two companies in exploring the merger.

But the full terms of a possible merger have not yet been completed, and the deal has not yet been reached until due diligence is exercised on both sides and a proposal appears that both companies will be satisfied.

Capco’s share price rose nearly one percent to R31.73 in morning trading on the JSE on Monday.

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