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Capital and Counties, Capco (LSE:CAPC), owner of Covent Garden, is selling at less than net current asset value, and therefore appears to be a bargain. However, Mr Market marked it down because he fears that so much rental income will be lost due to Covid-19 and property investors will demand higher yields that property values will decline significantly wiping out a lot of the balance sheet assets – an issue dealt with in my last newsletter. Mr Market also fears that the loss of cash inflows and profits will result in it being unable to manage its debt load.
Debt The table provides the key data on debt. Note that in 2020 debt rose as the company drew down some of its revolving credit facility. But this was not distressed borrowing. An asset was bought with the money: 26% of Shaftesbury, which owns 15.2 acres of West London including Carnaby Street and Chinatown. June 2020 Dec 2019 Dec 2018 Cash, £m 295 153 33 Loan notes -548 -546 -548 Bank loans -63 Finance lease obligations -10 -11 -6 Revolving credit facility maturing between 2024 and 2037 -449 nil nil Net debt -712 -404 -585 Undrawn committed facilities under the RCF, £m 255 715 802 LTV ratio (net debt to property value) 32% (Limit set by banks 40%) 16.3………………To read more subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1
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Prof. Glen Arnold
I'm a full-time investor running my portfolio from peaceful Leicestershire countryside. I also happen to be UK´s best selling investment book author and a Financial Times Best selling author. Originally, I wrote all my ideas out in full on this website. Now that ADVFN publish them they are entitled to display the full version for six months – you can see them here. Thus can I only post the first few paragraphs here for anything younger than six months.
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