Shaftesbury Capital (LON:SHC) reported higher rents, property values, earnings and dividends for the first half, with management citing continued leasing demand across its West End portfolio despite a challenging macroeconomic and geopolitical backdrop.
The company said total property value rose 3.4% on a like-for-like basis to £5.6 billion, supported by a 3.8% increase in estimated rental values, or ERVs. EPRA net tangible assets increased 3.9% to £2.23 per share, while total property return was 5%, ahead of the 2.6% return reported for the MSCI UK Property Index.
Leasing activity and rental growth
Management said footfall, customer sales and spending productivity continued to improve across the group’s West End destinations, which include Covent Garden, Carnaby, Soho and Chinatown. The portfolio comprises 2.8 million square feet of lettable space across 640 predominantly freehold buildings and approximately 1,900 units.
During the first half, the company completed 226 leasing transactions representing £23 million of contracted rent. The transactions were 5% above December 2025 ERV and approximately 18% above previous passing rents. Portfolio vacancy stood at 2.6% at the midyear point.
Retail and food and beverage were the largest contributors to rental growth. Retail valuation growth was 5.4%, while the food-and-beverage component recorded valuation growth of around 4%, according to management.
The company highlighted several retail openings and commitments, including Edikted, KOOKAÏ and K-Way at Carnaby, Sephora’s first West End store, Tiffany’s recommitment in Covent Garden, Matière Première’s first U.K. store, and POP MART’s largest London store in Chinatown.
In food and beverage, new openings included Buvette, BAO Borough, Padella and Vagabond Wines. Management said 12 new concepts opened during the period and that available space was often relet quickly with multiple bidders. It said about 0.2% of the portfolio was currently available to let in that category.
On the call, management said leasing spreads vary depending on the assets coming due in a particular period but that current activity supports its forward rental-growth target of 5% to 7%.
Income visibility and portfolio investment
CFO Situl Jobanputra said gross rents were £97.3 million, effectively 4% higher after adjusting for the formation of the Covent Garden partnership in April 2025. Commercial lettings and renewals were 5% ahead of ERV and 25% above previous passing rents.
ERV across the portfolio rose to more than £280 million. The company said it had 28% income reversion, with growth expected from contracted income, rent-free periods converting into running income, refurbishments and leasing activity on under-rented space.
Jobanputra said the majority of contracted income and rent-free periods should convert into running income over the next 12 months. The refurbishment pipeline represents about 5% of ERV and is also expected to be delivered over roughly the next year.
The company completed 116 residential leasing transactions during the period at rents around 2% to 4% above previous passing rents. It also said it was undertaking refurbishments focused mainly on offices, as well as some pubs and retail properties.
Management acknowledged a small increase in expected credit losses, which Jobanputra attributed to one or two unexpected tenant failures, including an office tenant in Carnaby. The company has taken back that office property and plans to refurbish and relet it at higher rents. Management said it saw no broader discernible trend from the failures.
Balance sheet and capital allocation
Net finance costs fell to £17.5 million, reflecting lower drawn debt. Net debt was slightly below £800 million and loan-to-value stood at 16%. The commercial portfolio’s equivalent yield was stable at 4.6%.
The company said it repaid exchangeable bonds using cash and used proceeds from the disposal of non-core asset Lillie Square to reduce bank facilities. Following repayment of private placement loan notes due later this year, the group expects to have access to more than £800 million of liquidity.
Jobanputra said most drawn debt is fixed-rate debt, while additional hedging will be added for future years. A recently arranged Covent Garden facility carries a margin of 90 basis points over SONIA before hedging and has an initial five-year term with two one-year extension options.
Shaftesbury Capital invested £31 million in targeted acquisitions and capital expenditure during the period. Management said it was bidding on several properties, including opportunities around Carnaby, Golden Square and Covent Garden, but emphasized that its priority for capital remains the existing estate.
Management described the West End investment market as highly competitive for smaller lot sizes, particularly transactions below £20 million and up to £50 million. The company said it seeks assets where it believes active management can create value and produce accretive returns within a relatively short period.
Outlook
Management said the West End remains supported by high footfall, limited availability of new space and a broad domestic and international customer base. Approximately 70% of footfall is driven by domestic U.K. visitors, including Londoners and visitors from elsewhere in the country, while international visitors account for roughly 30%.
The company said its portfolio is positioned to benefit from demand for experience-led retail and dining, as well as the continued appeal of London to international brands entering the U.K. market. It added that leasing momentum and operating performance had continued into the second half of the year.
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 £5.4 billion, extends to 2.8 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.
