One of London’s biggest and most influential restaurant landlords has announced it is seeking to raise £307 million to help steer it through the coronavirus crisis. Shaftesbury PLC owns the property of more than 600 restaurants, cafes, pubs, and shops across Chinatown, Soho, Covent Garden, and Seven Dials, and as such has felt the effects of a reduced number of tourists and office workers in the centre of the city during the pandemic. Its rental receipts have also dropped after businesses were forced to close through lockdown.
The Guardian reported that the landlord’s “emergency plans” to raise the cash from shareholders was designed “to boost its finances, pay some debts and make investments once the outlook for commercial property improves.” The announcement resulted in its share price falling by 15 percent, last Thursday’s biggest drop on the FTSE 100 index at the London Stock Exchange.
Shortly after the announcement, fellow central London landlord Capital and Counties (Capco) — owner of Covent Garden market — confirmed it would invest £65 million in new shares, taking its own stake in Shaftesbury to 25 percent. Capco’s interest in the Shaftesbury estate is concerned with what it calls the “landmark Covent Garden estate,” citing the area’s resilience during the pandemic, and its ability to have continue attracting the likes of chef Asma Khan’s Darjeeling Express, scheduled to open on the old Carluccio’s site on Garrick Street in mid-November.
It comes after Shaftesbury reported receiving 44 percent of rent from its tenants in the six months to September 2020. Chief executive of Shaftesbury, Brian Bickell, said the cash generation “will ensure the group maintains the financial flexibility and resources to navigate the unprecedented near-term operational challenges caused by the Covid-19 pandemic.”
He added that it would stand the landlord in better stead and “well-placed to benefit from the gradual return to more-normal patterns of life and activity that have always made London’s West End an unrivalled global destination.” The amount of money sought by the landlord is proportionate to the unknown nature of when such a “more-normal pattern” might return.
Central London businesses like restaurants and pubs have faced acute challenges since the lifting of full lockdown. The non-return of tourists and the diminished return of office workers has dramatically reduced business, prompting both prominent restaurateurs to call for measures to mitigate the West End becoming “a ghost town” and the Mayor of London to warn of its facing an “existential threat.”
“The economic environment remains unpredictable however Capco is confident in the long-term prospects of the West End,” the investor announced last week.
Sympathy for Shaftesbury will be in limited supply from some London restaurant owners. The decision by the landlord in June to announce the collection of 50 percent of rent owed when businesses were completely closed during lockdown meant that some businesses were forced to hand back their leases. Others, including the revered Hung’s on Wardour Street, have been forced to close — a reality which fed into the narrative that the pandemic has played into the hands of a landlord hellbent for some time on reshaping the estate according to new commercial objectives.
However, the landlord did pledge to work with some businesses on a case-by-case basis in order to try and reach “bespoke” agreements. Those include deferrals, rent-free periods, and agreements linked to turnover for the second half of this year. But the science behind those agreements is inexact; the sense being that the landlord will keep happy who it wants to keep happy and that those deemed expendable will be afforded limited leniency.
Elsewhere though, Shaftesbury has been praised for its part in the successful outdoor dining schemes that breathed life into Soho, Seven Dials, and Chinatown, during the summer months. But those initiatives were finite, reliant on good weather and bolstered by the government’s Eat Out to Help Out scheme in August. Autumn has brought with it cooler weather, a rise in COVID-19 infection, and the placement of London into the “high risk” tier of coronavirus restrictions.
And though the uncertainty is back, Shaftesbury’s power — and role as central London restaurant tastemaker — is unlikely to be diminished long-term. But the size of its ask right now indicates just how big an impact the crisis has had on the commercial ecosystem at the centre of this capital city.