Portfolio management brings £211.4m profits to The Crown Estate

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by Lin Freestone

The Crown Estate has recorded a 5.6% net revenue surplus of £211.4m for the year to the end of March 2008.

The Chairman of the Crown Estate, Ian Grant, reported that the results show that the Estate has become increasingly opportunity-focused, and has put in place firm foundations for active portfolio management in the future.

The Estate administrates the portfolio, which encompasses many of the UK’s cityscapes, ancient forests, farms, parkland, coastline and communities, on behalf of the Queen.

The successful year in the face of difficult economic conditions has been attributed to the Estate’s investment strategy. This has seen a rebalancing of its portfolio and a reduction in its exposure to high-risk sectors such as central London offices, and asset management activities across all sectors of the portfolio.

A £600m, 50:50 investment partnership with British Land to own and manage large retail parks has been entered into, enabling both parties to share expertise and generate attractive rewards from a portfolio of retail parks.

As well as acquiring new residential property, the Estate has made a number of key disposals, including the Quadrangle in Oxford Street. This sale, together with others in High Holborn and elsewhere in London, is part of a strategy to dispose of non-core assets in order to concentrate on core London holdings, including Regent Street, and to increase diversification outside central London.

The economic climate resulted in a slight drop in urban estate turnover to £194.4m, down 0.7% on last year and also in property values to £5,381m, down 0.2% on the same period in 2007.

Planning consent has been granted by Westminster City Council for The Quadrant, which is a mixed-use regeneration scheme of the Regent Palace Hotel, Café Royal and Quadrant Arcade blocks. The redevelopment is a key milestone in the Crown Estate’s £500m Regent Street investment programme.

It will create a new one million sq ft built area in the heart of the West End, with an additional 44,000 sq ft of public realm area. The development is considered to be the most significant addition to London’s public realm in the West End over the last 30 years.

The property value of the rural estate, comprising 780 agricultural tenancies as well as around 730 residential tenancies, forestry and natural mineral resources, was £903m, a 26.5% increase over 2007. Turnover increased by 0.9% to £22.5m.

As a result of a study which revealed the vital role played by marinas in economic development, the Estate acquired its first marina – the 165-berth Deganwy Marina in Conwy, north Wales – and plans to acquire more.

All the revenue surplus of The Crown Estate is paid to the Treasury for the benefit of all UK taxpayers.