Real estate private equity firm Madison International Realty has acquired a 3.12% stake in Capital & Counties Properties (CapCo), taking its holding in the property investor / developer to around 26.5 mln shares.
The acquisition of shares in the owner of two super-prime London real estate assets - Covent Garden and Earl’s Court - was led by Derek Jacobson, Madison’s co-chief investment officer.
The purchase fitted in with the firm’s strategy of investing in listed real estate companies trading at outsized discounts to their net asset value, a spokesperson said.
Welcoming the deal, Ronald Dickerman, Madison’s founder and president, said he supported CapCo’s plans to demerge the two locations and unlock the potential to develop up to 7,500 residential properties.
Dickerman explained, ‘We have acquired this holding in CapCo at a material discount to the most recently reported net asset value. We believe the current share price materially undervalues the potential of the Company and the underlying properties it holds.
‘We are fully supportive of the Company’s strategic plans to demerge Covent Garden and Earl's Court into separate entities as a means of unlocking the inherent value of each, particularly given their different investment profiles. We also recognize the turbulence created by the UK political climate and the impact on CapCo’s share performance.
‘Covent Garden is an iconic central London estate which continues to deliver rental and reversionary growth, demonstrating the resilience of prime central London retail, despite wider political uncertainty.’
Madison International Realty specializes in acquiring partial ownership stakes, joint venture, direct LP and listed property shares in prime properties and portfolios in primary markets in the US, UK and Western Europe.
The CapCo investment is yet another led by Madison's Jacobson who joined the company in 2004. His deal resume includes Madison buying into Songbird Estates when the company was undervalued in 2013. He has also been involved in deals for Devonshire Square, Quintain, Paternoster, Welput, Houndsditch and Lime Street. Overseas deals by Jacobson include Warsaw Spyer and DB Towers in Malta.
News of the CapCo transaction comes as the property company revealed a £49 mln writedown on its Earl's Court property holding. It said one part of land it holds with Transport for London had been marked down. CapCo is planning a huge £12 bn project involving homes and commercial real estate space.
