Covent Garden stake sold to Norway oil fund for £570 million pounds

Norway’s oil fund has secured a 25 per cent stake in Covent Garden, one of London’s most iconic tourist spots, for £570 million. Shaftesbury Capital, the owner of the estate, will maintain control over the historic fruit and vegetable market, which has transformed into a thriving retail and leisure destination.

Shaftesbury Capital will use the proceeds from the sale to reduce its debt and invest in acquiring more properties in the surrounding West End area. The deal, expected to complete in early April, values the entire Covent Garden estate at £2.7 billion, aligning with the December valuation by property experts CBRE.

Jayesh Patel, head of UK real estate at Norges Bank Investment Management, stated that the acquisition highlights the company’s confidence in London’s economic resilience. Norges Bank, which oversees Norway’s £1.8 trillion sovereign wealth fund, has been actively expanding its investments in prime real estate across the capital.

The Covent Garden estate comprises 220 buildings accommodating approximately 850 tenants, including shops, restaurants, bars, offices, and residential spaces. The site generates £104 million annually in rental income, a figure that is expected to increase to £134 million after upcoming lease renewals. Shaftesbury will benefit further from receiving management fees from Norges alongside reduced interest repayments on its debts, which will strengthen its financial position.

Shaftesbury Capital, formed by the 2023 merger of Shaftesbury and Capital & Counties, is already one of London’s largest real estate groups. It controls over 40 acres of property in areas such as Covent Garden, Soho, and Chinatown. Norges Bank, already a major shareholder in the company with a 23.5 per cent stake, has supported its strategy of targeted growth and higher profitability.

Outside Covent Garden, Norges has also been deepening its presence in London’s real estate market. Recent acquisitions include a £306 million stake in Mayfair, adding to its significant holdings on Regent Street, Savile Row, and New Bond Street. Beyond London, it also became the sole owner of Sheffield’s Meadowhall shopping centre last year, further demonstrating its focus on long-term investments in UK property.

Shaftesbury Capital’s stock market valuation has struggled to reflect the true worth of its real estate assets, trading at a significant discount to its net asset value prior to the announcement. However, the sale has prompted a rise in investor confidence, with shares jumping nearly 10 per cent after the news broke.