Shaftesbury Capital (LON:SHC) reported what management described as “another excellent year of progress and performance” as it presented its third set of annual results, pointing to growth in rents, valuations, earnings, and dividends alongside a significantly strengthened balance sheet.
Chief Executive Ian Hawksworth said conditions across London’s West End remained “very active” despite macroeconomic and geopolitical risks, with positive trends in footfall and sales across the company’s prime portfolio. He highlighted a “strong pipeline” of leasing activity, limited vacancy, and continued momentum across the group’s key destinations: Covent Garden, Carnaby, Soho, and Chinatown.
Valuation, returns, and dividend growth
Underlying earnings rose 12% to GBP 81.9 million, or 4.5 pence per share, according to Finance Director Situl Shah. The board proposed a final dividend of 2.1 pence per share, taking the full-year dividend to 4 pence per share, an increase of 14% year-over-year.
Leasing strength and embedded rental reversion
Shah said gross rents rose 5.9% like-for-like to GBP 195.6 million, which management attributed to leasing and asset management. Across the year, the company completed 434 leasing transactions representing nearly GBP 40 million of contracted rent. Those deals were completed at roughly 10% ahead of December 2024 ERV and 14% ahead of previous passing rents. Vacancy across the portfolio was reported at 2.6%.
The company also emphasized embedded growth, with Shah noting a 26% uplift between annualized gross income and current market rents, which management presented as “good visibility” on future income growth. Shah added that roughly GBP 16 million of income was either contracted or related to rent-free periods, with the majority expected to convert to running income over the next 12 months.
In the Q&A, management described demand across segments as broadly strong:
- Retail: Hawksworth said retail leasing demand remained very strong, noting commentary from brokers that the retail leasing market is “as strong as they’ve ever seen it.”
- Food & beverage: The company said availability is extremely limited and that when space becomes available “multiple operators” pursue it.
- Offices: Hawksworth said offices represent about 20% of the portfolio and that demand is supported by locations and amenity value, leading management to expect continued rental growth.
Portfolio highlights: Carnaby, Covent Garden, Soho, and Chinatown
Hawksworth described Shaftesbury Capital’s holdings as an “impossible to replicate portfolio,” totaling 2.8 million sq ft of lettable space across 640 predominantly freehold buildings and approximately 1,900 individual units. The mix is broadly one-third retail, one-third food and beverage, with the remainder in upper floors including office and residential.
On Carnaby, management said it has made strong progress and sees scope for further growth. Responding to a question on whether Carnaby’s ERV gains can continue, Hawksworth said the company has introduced brands that are trading at “significantly higher sales densities” than prior occupiers, which he said supports medium- to long-term rental growth. He also said Zone A rents remain below other locations in the group’s portfolio and “behind the general tone in the West End,” suggesting room for catch-up even as growth is being delivered across the wider portfolio.
Hawksworth highlighted examples of brand additions and leasing activity across estates, including Charlotte Tilbury on Carnaby Street, with Sephora and Edikted expected to join; and new Covent Garden additions including Nespresso and Byredo. On food and beverage, he cited signings in Covent Garden such as Burro in Floral Court, Harry’s Restaurant and Bar on the Piazza, and Buvette in Neal’s Yard, as well as new concepts in Soho including Padella and The Shaston Arms. In Chinatown, he said the company is expanding variety by increasing Pan-Asian offerings at different price points.
Management also reported that retail valuations rose 10.4% across the portfolio. Residential performance was described as steady, with 285 transactions completed during the year and rents achieved around 4% ahead of previous passing rents.
Balance sheet, liquidity, and financing plans
One of the year’s most significant developments was the formation of a long-term partnership in Covent Garden with Norges Bank Investment Management (NBIM), which management said underscored the “fundamental value” and attractiveness of the portfolio. Shah noted the results focus on “group share numbers,” including Covent Garden at 75% post-transaction, and said the deal reduced net debt and improved flexibility.
Net debt fell from GBP 1.4 billion to GBP 0.8 billion on a group share basis, and loan-to-value declined to 17%. Net tangible assets increased 7% to GBP 2.15 per share, driven primarily by valuation gains. Finance costs were reduced by nearly 30% to GBP 41.4 million, aided by debt reduction. Shah said the company will refinance or repay GBP 400 million of maturing debt in the year ahead and is targeting finance costs to be “broadly flat overall” based on current borrowing levels.
The company also outlined recent financing steps, including a new GBP 300 million five-year loan facility for Covent Garden entered in October 2025, and extensions of other banking facilities with GBP 450 million of undrawn capacity out to 2029 and 2030. Shah said margins were reduced to reflect market conditions and the group’s strengthened credit profile. The company is also positioned to repay GBP 275 million of exchangeable bonds maturing at the end of March 2026 and capped GBP 300 million of SONIA exposure at 3% for the year.
Outlook and targets
Hawksworth said the company has made “a very good start to 2026,” citing high footfall, customer sales growth, low vacancy, and a strong leasing pipeline. He reiterated targets of 5% to 7% rental growth, 7% to 9% total property return, and 8% to 10% total accounting return.
In response to questions about acquisition opportunities and “firepower,” management said it is tracking opportunities but emphasized that buildings adjacent to its estates do not trade frequently. Hawksworth said the company remains focused on driving value from the existing 640-building portfolio while staying ready to move quickly when assets become available, adding that it would like to expand ownership “substantially” as opportunities arise.
About Shaftesbury Capital (LON:SHC)
Shaftesbury Capital PLC (“Shaftesbury Capital”) is the leading central London mixed-use REIT and is a constituent of the FTSE-250 Index.
Our property portfolio under management, valued at £5.2 billion, extends to 2.7 million square feet of lettable space across the most vibrant areas of London’s West End. With a diverse mix of shops, restaurants, cafés, bars, residential apartments and offices, our destinations include the high footfall, thriving neighbourhoods of Covent Garden, Carnaby, Soho and Chinatown.
