UK: Crown Estate Posts Profit of GBP 252.6 Million

The Crown Estate announced another record financial result, posting a profit of £252.6 million which they pay entirely to the UK Treasury for the benefit of the nation’s finances.

Profit for the year was up by 5.2 per cent on last year and capital value rose by over 7 per cent to more than £8.6 billion. For the fifth consecutive year The Crown Estate outperformed their bespoke industry benchmark, recording a total return of 11.3 per cent against the IPD (Investment Property Databank) target of 9.9 per cent. After an increase of 7.2 per cent total property value has now exceeded the £8 billion mark for the first time, totalling £8.1 billion. Third party funds under management at the end of the financial year totalled £610 million.

Chairman Sir Stuart Hampson said: “We are proud that another record Crown Estate performance will again make a strong contribution to the nation’s finances.”

Chief Executive Alison Nimmo CBE added: “Today’s results are a ringing endorsement of the quality of our portfolio, our active asset management and our highly skilled team. Despite challenging market conditions, we are well placed as a business with a clear vision and investment strategy, great partners and a strong balance sheet.”

 Urban portfolio: The urban portfolio had another strong year, outperforming its industry benchmark by 6.5 per cent and achieving a total return of 10.6 per cent on a portfolio of assets now worth £5.9 billion. The made major progress in central London. Since year-end they have delivered the £100 million St James’s Gateway scheme, a joint venture with Healthcare of Ontario Pension Plan (HOOPP) and established a £320 million partnership with Oxford Properties to deliver their landmark St James’s Market project.

On behalf of their partnership with Norges Bank Investment Management, The Crown Estate secured a range of world class retailers for Regent Street, including J Crew and Watches of Switzerland, and made significant progress on the next generation of redevelopment projects. They also continued to promote their Recruit West End programme, which this year brokered 118 jobs for young Londoners. Outside London, the regional portfolio, now valued at £1.6 billion, delivered a strong total return outperformance through an active approach to asset management and strategic investment in new assets.

Energy and infrastructure portfolio: The value of the portfolio rose by 8.2 per cent in 2012/13, reaching £564 million, and delivered a total return of 10.6 per cent. Over the year, the energy and infrastructure team continued to facilitate growth in the offshore wind industry with a number of initiatives to drive down costs and encourage investment in the sector, including a comprehensive study into cost reduction released last May. This year has seen an extra 1 GW of offshore wind power come on stream, with approximately 300 new turbines erected offshore.

The success of the wind energy industry this year meant that, during one 24 hour period in March, enough electricity was produced by wind technology to power 40 per cent of homes in the UK. Across the portfolio, they worked to support local communities, including brokering an agreement to unlock BT’s largest ever sub-sea engineering project to bring high-speed broadband to Highlands and Islands communities in Scotland.

Rural and coastal portfolio: During a successful year, the portfolio delivered a total return of 13.3 per cent and increased in value by 3.2 per cent to £1.4 billion. They renewed their focus on strategic land pipeline capable of delivering 10,000 new homes over the next 25 years. During the year, and since year-end, planning applications have been approved for approximately 1,800 new homes, including major schemes at Taunton and Nottinghamshire.

The Crown Estate continued to enhance the portfolio through investment, including £250,000 into new mountain bike trails at their Glenlivet estate in Scotland and supporting coastal communities through £1 million marine stewardship fund.

The Crown Estate’s results were for the first time published in an integrated annual report, offering a concise overview of how they create value in the short, medium and long term and demonstrating how sustainability is embedded within their business model. As a member of the International Integrated Reporting Council’s pilot programme, they will continue to develop this approach over the next few years.

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Press release, June 27, 2013; Image: thecrownestate