Shaftesbury Capital: West End Winners

Spanning c640 buildings across Covent Garden, Soho, Chinatown and Carnaby, Shaftesbury Capital owns an unparalleled portfolio in London's cultural heart. These are high-footfall, experience-led destinations with heritage architecture and limited supply. Their desirability to global brands and independents alike ensures enduring demand and pricing power. This unique urban footprint provides a moat against competition and exposure to the capital’s tourism, leisure and retail resurgence. With seven-day-a-week vibrancy and unmatched access via the Elizabeth Line and key tube hubs, the portfolio benefits from one of the most dynamic catchment areas in Europe.

Nearly a quarter of Shaftesbury's estate remains under-rented, offering significant upside through lease re-gears and re-lettings. In H1 2025, Shaftesbury signed 193 leasing deals at 9% above ERV, delivering 2.9% ERV growth in just six months, clear evidence of strong demand and pricing power. Active curation, strategic refurbishments, and a detailed understanding of local dynamics help drive footfall and tenant mix quality. With consistent demand from retailers, F&B operators, and offices, there’s a visible pathway to converting ERV upside into contracted income. The company’s granular asset-by-asset leasing strategy, supported by footfall analytics and customer insights, further enables it to tailor leasing decisions to maximise long-term value creation.

The Covent Garden Partnership with Norges Bank generated £574m in proceeds and halved net debt. Liquidity now exceeds £1.1bn. Shaftesbury Capital retains full operational control and earns management fees, providing both firepower for accretive investment and resilience against macro headwinds. With the shares trading at a c.24% discount to EPRA NTA of 206.8p, investors gain access to London’s most iconic assets at a deep relative valuation, with re-rating potential as income and dividends grow. The capital flexibility allows the business to evaluate opportunistic acquisitions, accelerate refurbishments, or consider shareholder distributions, all while maintaining balance sheet strength and strategic control.

• Covent Garden Partnership Completion: Finalisation of the £574m Norges JV has halved net debt, lowered gearing to 16.6%, and provided over £1.1bn of liquidity. Shaftesbury now has clear headroom to pursue selective reinvestment and strategic returns.
  
  

• Refurbishment Delivery: Pre-lettings and completions at redevelopments are set to begin contributing to contracted income. These developments are expected to drive early revenue uplift and demonstrate execution capability to the market.

• Reversion Capture: Lease roll-offs and rental uplifts should allow Shaftesbury Capital to realise substantial rent reversion, particularly in the retail and F&B segments. As occupancy stabilises at premium levels, the business can crystallise upside through re-pricing and tenant rotation. Rent signed in H1 2025 was 16.3% above passing rent and 9% above ERV, with 20% of ERV resetting each year.
  
  

• Capital Deployment: Management has hinted at selective acquisitions or share buybacks to close the NAV discount if value opportunities persist. With liquidity exceeding £1.1bn and net debt halved, Shaftesbury Capital is well-positioned to execute on strategic deployment of capital to enhance returns.

• Tourism Recovery: With international tourism to London recovering, Shaftesbury Capital’s exposure to West End destinations positions it to benefit from rising visitor numbers. High-spend visitors are likely to continue supporting experiential retail, premium dining, and hospitality brands located in Shaftesbury’s properties.
  
  

• Reversion Realisation: Full realisation of embedded rental reversion could sustain targeted 5–7% rental growth and 8–10% total accounting returns. Over time, enhanced earnings and dividend progression could support a narrowing of the share price discount to NAV, attracting long-term capital back into the stock.

Shaftesbury Capital's portfolio is intrinsically tied to the health of the London economy. Any prolonged downturn, disruption in international tourism, or transport-linked accessibility issues could dampen footfall and reduce discretionary spending in its retail and dining assets, impacting rental income and tenant stability. Additionally, macroeconomic uncertainty, whether due to inflation, geopolitical instability, or changes in interest rate policy, could influence tenant decision-making and consumer confidence, thereby increasing the volatility of earnings.

Retailers and hospitality tenants face rising cost pressures including wages, business rates and input inflation. While Shaftesbury Capital's locations are in high demand, sustained margin compression could reduce their ability to absorb rental increases or support long-term leases, limiting reversionary upside. There is also a risk of more tenant insolvencies or turnover in a weak consumer environment, potentially increasing vacancy and re-leasing costs. The company's success relies on the health of a diverse base of small and mid-sized operators, many of whom are sensitive to short-term financial shocks.

Approximately 24% of the estate remains under-rented, but capturing this value depends on effective refurbishments and lease restructuring. Delays in planning permissions, construction bottlenecks or misjudged tenant mix could impede timing and scale of income growth realisation. Furthermore, as Shaftesbury Capital executes its reversion strategy, there’s a risk that capital expenditures outpace income gains or that market rent expectations prove difficult to achieve in some sub-sectors. Navigating this balance requires precision, timing, and strong leasing execution.