23 January 2013
CAPITAL & COUNTIES PROPERTIES PLC
CAPCO AND LBHF SIGN CONDITIONAL LAND SALE AGREEMENT
Capital & Counties Properties PLC ("Capco") and the London Borough of Hammersmith & Fulham ("LBHF") have entered into a Conditional Land Sale Agreement ("CLSA") that enables the inclusion of LBHF's land holdings in the redevelopment of the Earls Court & West Kensington Opportunity Area ("ECOA") under Sir Terry Farrell's Masterplan.
The signing of the CLSA is the latest milestone in the on-going process to take the Earls Court Masterplan forward. This follows the recent resolution to grant planning consent for the Earls Court Masterplan by the Royal Borough of Kensington & Chelsea ("RBKC") on 20 November 2012, along with LBHF's decision to grant consent in September.
LBHF's holdings in the ECOA include the West Kensington and Gibbs Green estates (the "Estates"). The CLSA provides Capco the option to acquire approximately 22 acres of land in the ECOA for a total cash consideration of £105 million plus the re-provision of the 760 homes currently on the Estates. All qualifying Estates residents will be offered a new home by LBHF within the redevelopment plus compensation. The CLSA is in line with the draft terms previously published by LBHF.
The total cash consideration of £105 million is payable as follows: Capco paid £15 million in July 2011 at the time of entering into the Exclusivity Agreement with LBHF; and on signing of the CLSA, Capco will acquire 11 Farm Lane and the Gibbs Green School site for a further £15 million. The remaining £75 million is payable in a series of five annual instalments commencing when Capco exercises the option (exercisable until 2017) to acquire LBHF's remaining land. Land can be drawn down in phases until 2035 but no phase can be transferred unless Capco has first provided replacement homes for the residents of the relevant phase.
Gary Yardley, Investment Director of Capco, commented:
"The Earls Court project now has great momentum. Following the resolutions to grant planning consent from RBKC and LBHF last year, we are pleased to have entered into the CLSA with LBHF marking another important step in the ongoing process to create Sir Terry Farrell's vision for the Opportunity Area. We look forward to working with the local community and delivering the Earls Court Masterplan which will create 7,500 new homes and 12,000 new jobs in the area."
Whilst the purchase of the Farm Lane and Gibbs Green school sites are unconditional, the disposal of the Estates is conditional on approval from the Secretary of State for the Department of Communities and Local Government.
Capital & Counties Properties PLC |
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Ian Hawksworth, Chief Executive Gary Yardley, Investment Director |
Tel: + 44 (0) 20 3214 9188 |
Soumen Das, Finance Director |
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About Capital & Counties Properties PLC (Capco):
CAPITAL & COUNTIES PROPERTIES PLC is one of the largest listed companies that specialises in central London real estate and is a constituent of the FTSE-250 Index. CAPITAL & COUNTIES PROPERTIES PLC holds 3.0 million square feet of assets valued at £1.6 billion (as at 30 June 2012) in three landmark London estates: Covent Garden, which has assets valued at £856 million, including the historic Market Building; Earls Court & Olympia Group and 50% of the Empress State building in Earls Court amounting to aggregate property assets of £620 million; and the Great Capital Partnership, a joint venture with Great Portland Estates, which holds prime West End properties of which Capco's share is £159 million. The company is listed on the London Stock Exchange and the JSE, Johannesburg.
APPENDIX - Summary Terms of the CLSA
The CLSA details the process under which LBHF's land in the ECOA will be included within Sir Terry Farrell's Masterplan. The agreement has been entered into by LBHF and EC Properties LP, a wholly-owned subsidiary of Capco.
1. Consideration and land purchases
The total cash consideration set out in the CLSA is £105 million. The £15 million paid in relation to the Exclusivity Agreement in July 2011 will be regarded as the first instalment of the consideration. £10 million of this is recoverable if the Secretary of State does not approve the disposal of the Estates and the CLSA is terminated. A further payment of £15 million is being paid on signing of the CLSA for the Farm Lane and Gibbs Green School sites. Legal title of Farm Lane will be transferred immediately on signing. Gibbs Green School will continue to be used by Queensmill School until the school relocates to new premises in 2014; legal title will be transferred at this time.
The remaining £75 million is payable in five equal annual instalments of £15 million each once Capco exercises its option to acquire the land. This option is exercisable until the earlier of (a) 5 years from the date of entering into the CLSA and (b) nine months from completion of the affordable housing on Seagrave Road. If the option is not exercised by December 2015 the annual payments will be increased in line with RPI. Land can be drawn down in phases until 2035 but no phase can be transferred unless Capco has first provided replacement homes for the residents of the relevant phase. If the CLSA terminates or expires before all the land is drawn down, there are provisions dealing with the pro rata refund of the £75 million cash consideration where specified events subsist at the date of termination.
Overage of up to £65 million is payable in the event that the total area developed across the ECOA exceeds that set out within the Masterplan planning applications.
2. Statutory Blight and early purchases
Replacing the agreement signed in March 2012 between Capco and LBHF, the CLSA provides that Capco will acquire any private residential units on the Estates in the event that LBHF is required to purchase these properties as a result of an owner bringing forward a valid claim under certain provisions of the Town and Country Planning Act 1990 which relate to Statutory Blight. There is a cap of £55 million for such purchases, which includes certain other related costs of up to £10 million.
Separately, if a resident who owns their home on the Estates chooses not to take up the offer of a new home within the development and to move away early, Capco has offered to purchase such homes up to a cap of £7.5 million from the date of signing of the CLSA. Once the Secretary of State has issued a satisfactory consent and a satisfactory planning consent has been granted, and both these consents are free from challenge, this cap will increase to £15 million.
Once the option is exercised, the cap for all purchases under these provisions relating to Statutory Blight and early purchases will be £55 million. Sums paid by Capco to acquire existing homes would be offset against the cash consideration where these homes are included in a phase that is transferred to Capco.
