Norway’s SWF Buys 25% Stake in Covent Garden

Norway’s sovereign wealth fund Norges Bank Investment Management (NBIM) and the UK’s Shaftesbury Capital on Thursday announced that they have formed a partnership to acquire 25% stake in the latter’s Covent Garden estate for around $739 million. 

Shaftesbury Capital will retain the remaining 75% ownership and management control over the estate. The transaction values the Covent Garden estate at $3.5 billion, in line with its independent property valuation as at 31 December 2024 and the transaction is expected to take place in early April 2025.

Covent Garden is a world-class global destination in the heart of the West End of London, centred around the iconic Piazza, the Market Building and surrounding streets, together with Seven Dials, Shaftesbury Capital said in a regulatory filing with London Stock Exchange (LSE) this morning.

It is a mixed-use portfolio of assets, with 74% of the property value represented by retail and food & beverage and 26% by office and residential. The estate is a vibrant, high-footfall destination, which provides a seven-days-a-week trading environment and exposure to a diverse customer base which has proven to be resilient throughout economic cycles.

The portfolio has a net initial yield of 3.6%, annualised gross income of $134.84 million and an estimated rental value (ERV) of $173.73 million as at 31 December 2024. The portfolio covers some 220 buildings and over 850 units, across 1.4 million sq. ft., excluding 0.1 million sq. ft. of long-leasehold residential interests. 

Shaftesbury Chief Executive Ian Hawksworth said that this investment by a leading global real estate investor demonstrates the quality of their portfolio. This partnership brings together two long-term investors who have a shared confidence in and ambitions for the growth prospects of the Covent Garden estate and the West End. 

Through partnering with private capital, this transaction leverages our operating expertise and assets, enhancing growth and expansion opportunities across our portfolio whilst strengthening our financial position and providing significant optionality to the Group, he said. 

As demonstrated by their recent 2024 results, Shaftesbury Capital’s portfolio is anticipated to deliver long-term sustained income and value growth. Backed by a strong balance sheet, they were well-positioned to capitalise on market opportunities in London’s West End, he added.

Jayesh Patel, Head of UK Real Estate at NBIM, also said that this investment underscored their belief in the strength of London with the portfolio complementing our other high quality West End investments.

Covent Garden is one of the world’s most recognised retail, leisure and cultural destinations and we look forward to supporting Shaftesbury Capital’s management team, with their strong track record of delivering the growth potential of this prime West End estate, Patel added.

Shaftesbury Capital has assembled the Covent Garden estate, now comprising some 220 buildings over many years, and implemented a comprehensive leasing strategy and a creative approach to asset management alongside strategic consumer marketing, selective refurbishment and development, and enhancement of the public realm.

This unique portfolio in the heart of London’s West End represents one of the world’s most desirable real estate locations.

Use of Proceeds

The Transaction provides increased financial flexibility, with a range of options to deploy the proceeds to enhance long-term returns for shareholders, including acquisition opportunities in both Covent Garden and across the wider Group, with a number of buildings currently under review.

It will be used into the existing Shaftesbury Capital portfolio including refurbishment, asset management and repositioning opportunities, to realise the long-term potential of our assets, and repayment of outstanding debt, whilst maintaining access to significant liquidity.

The proceeds will be used initially to reduce drawn debt, in particular partial repayment of the Canada Life term loan ($87.38 million of the $175.03 million, which will utilise approximately $54.45 million of the proceeds net of restricted cash), and in due course repayment of the $356.54 million of exchangeable bonds due in March 2026. In the meantime, cash will be held on deposit until deployed.