Roula Khalaf, the Editor of the Financial Times, curates a selection of her preferred stories in a weekly newsletter known as the Editor’s Digest.
In a significant investment move, Norway’s sovereign wealth fund has finalized a £570 million deal to acquire a 25% stake in Covent Garden from Shaftesbury Capital, a publicly listed landlord in the UK. Norges Bank Investment Management has agreed to purchase a non-controlling stake valued at £2.7 billion, while Shaftesbury will retain management of the estate. Earlier this year, Norges also secured a £306 million stake in a segment of the Duke of Westminster’s Grosvenor estate.
Jayesh Patel, Norges’ head of UK real estate, commented on the investment, stating that it reinforces their confidence in London and is complementary to their other high-quality investments in the West End. Covent Garden is globally recognized for its vibrant retail, leisure, and cultural offerings.
This latest transaction, reported first by CoStar News, increases Norges’ investment in London to over £875 million this year, marking its first substantial acquisitions in the city since 2018. The fund also holds a significant 25% stake in Shaftesbury and has previously engaged in private minority deals. It co-owns Regent Street with the Crown Estate and has invested in the Pollen Estate near Savile Row, where it increased its ownership last year. Outside of London, the fund fully acquired the Meadowhall shopping center in Sheffield for £360 million in a deal with British Land last year.
Jefferies analyst Mike Prew noted that Norges’ acquisition of West End estates signifies a show of confidence in the market. The fund will provide £570 million in cash for its portion of Covent Garden, which currently carries £380 million of debt against its £2.7 billion valuation.
The transaction confirms Shaftesbury’s previous independent valuations of its 220 buildings around the historic Covent Garden and Royal Opera House areas. Recently, listed landlords have seen their shares trade at discounts relative to asset value, owing to elevated interest rates affecting commercial property investments. Shaftesbury’s CEO, Ian Hawksworth, highlighted that the deal indicates private investors are adopting a more optimistic outlook, placing a premium on high-quality real estate beyond stock market valuations.
Post-pandemic tourism surges have benefited London’s West End, with Shaftesbury experiencing its busiest Christmas on record in 2024, welcoming over a million visitors daily during peak periods. The uptick in rent from shops, eateries, and office spaces contributed to a 4.5% increase in the value of their £5 billion property holdings in 2024. Proceeds from the transaction provide Shaftesbury with the financial flexibility to reduce debt, enhance existing properties, and pursue further acquisitions within the West End.
