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Round 1 and 2 extensions to power 1.4 million homes: more...

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Fact:

In 2009/10 The Crown Estate saw:

  • A return of net income surplus (profit) to the Treasury of £210.7 million

  • An increase in revenue (excluding service charge income) of 4.9% to £299.7 million

  • An increase in total capital value of 10% to £6.6 billion

Latest news headlines

Four companies awarded offshore wind demonstration sites

Five-year Dunster roadmap

Income surplus of £210.7 million announced

Special achievement award for MaRS

Open air theatre at the Savill Garden

Scots companies acclaimed as results announced

Dunster estate celebrates ‘Walkers are Welcome’ status

Sir Stuart Hampson, chairman of The Crown Estate

 

Press release

THE CROWN ESTATE ANNOUNCES INCOME SURPLUS OF £210.7 MILLION

15 July 2010

The Crown Estate earned a net income surplus (profit) of £210.7 million in the year ending 31 March 2010. This is paid to the Treasury and helps reduce the fiscal deficit. Primarily because of the exceptionally low level of interest rates which we earned on our capital reserves (see footnote), this represents a fall of 7 per cent compared to the previous year.

The underlying performance of the portfolio continued to be strong.

  • Despite being a net seller of assets over the year, our gross surplus of £246.8 million compares favourably to last year’s £243.2 million.

  • Our activity in the capital markets was reflected by the fact that our commercial portfolio outperformed the IPD Quarterly benchmark (IPD Universe) by 2.6 per cent, delivering a total return of 20.4 per cent.

  • The total value of our directly-held property portfolio rose by 8.6 per cent to £6.0 billion (£5.5 billion in 2008/09).

  • Our total capital value rose by 10.4 per cent to £6.6 billion (£6.0 billion in 2008/09).

  • Over the last ten years, the value of our property portfolio has increased by £2.6 billion.

  • Over the same period, The Crown Estate has paid a total of £1.9 billion to the Treasury.

The full annual report and accounts for 2009/10 can be visited at:

 External site icon  Annual Report and Accounts

Sir Stuart Hampson, Chairman of The Crown Estate, said, “As we anticipated, 2009/10 was an extremely challenging year. It has been a period when we have drawn on all the expertise and experience of our people to record a set of results which stand up well in the context of the economic downturn. Our urban, rural, marine and Windsor estates all recorded pleasing financial results.”

Roger Bright, Chief Executive of The Crown Estate, added, “Despite the worst recession that most of us have experienced, thanks to the diversity and quality of our portfolio and the efforts of our staff we have delivered a good set of financial results.

“Looking ahead, our overall strategy is to concentrate on our core holdings and our areas of expertise. The Marine Estate will play an increasing part in this as it continues to facilitate the development of offshore renewable energy.

“Our results should be read in the context of our obligation not to chase short term income returns, and our statutory restrictions on borrowing, which increases our exposure to low interest rates.”

As mentioned in last year’s Annual Report, together with IPD we have been developing a bespoke weighted Crown Estate benchmark to more accurately reflect our performance against a similar portfolio of properties. On this measurement our total return in 2009/10 was 17.1 per cent, outperforming the bespoke benchmark which showed a return of 16.4 per cent.

On the urban estate the value of the portfolio including indirect investments increased by 9.6 per cent to £4.6 billion (£4.2 billion in 2008/09).

As part of the diversification strategy to reduce our London weighting, the year saw us invest in two more major shopping centres. In Exeter, we acquired a 50 per cent stake in Princesshay Shopping Centre from Land Securities Group PLC for close to £100 million, and as the financial year ended we completed the purchase of the 320,000 sq ft Westgate shopping centre in Oxford for around £56 million. We sold a number of non-core properties, including the Coutts building on The Strand in London, to concentrate central London exposure on our core London holdings of Regent Street and St James’s.

Our activity in the capital markets was reflected by the fact that our commercial portfolio outperformed the IPD Quarterly benchmark (IPD Universe) by 2.6 per cent, delivering a total return of 20.4 per cent.

At a time when many of our competitors ceased or substantially reduced their development activity, we have continued to push ahead with our major schemes. The Quadrant 3 redevelopment, the former Regent Palace Hotel, which we are transforming into a 270,000 sq ft office, retail, restaurant and residential development, remains both on schedule and on budget.

During the year we obtained planning consent for our initial St James’s development, at Piccadilly Circus, and opened the new “x-shaped” crossing at Oxford Circus, giving more freedom to the 200 million visitors, shoppers and workers who visit the West End annually. It is one of the largest public realm projects since the redevelopment of Trafalgar Square.

On the marine estate progress in the renewable energy sector dominated, as we took significant strides towards enabling developers to realise the huge potential of the energy-rich coastal waters around the UK.

Revenue fell by 6.2 per cent to £46.6 million, reflecting conditions in the wider economy and a fall in demand for dredged aggregates from the construction industry. Total property value increased to £443.7 million, up 8.4 per cent on the previous year.

The coastal estate, which includes marinas, ports, harbours and other coastal activity, contributed £13.6 million to our turnover, an increase of 6.2 per cent.

The key highlight of the year on the marine estate was the Round 3 offshore wind programme which culminated towards the end of the financial year in the announcement of the successful bidders for each of the nine wind zones around the UK coastline. Coming on top of Rounds 1 and 2 and a Scottish Territorial Waters round, all of which are still in development, Round 3 aims to deliver a quarter of the UK’s total electricity needs by 2020. The UK is already a world leader in generating electricity from offshore wind, and over 1GW of electricity is in production from leasing Rounds 1 and 2.

In March 2010, we passed another milestone with the announcement of the successful bidders for the world’s first commercial wave and tidal leasing round, for 10 sites in Scotland’s Pentland Firth and Orkney waters.

The rural estate achieved a pleasing performance during the year, with capital value rising by 5.7 per cent to £971.7 million. Revenue was £25.1 million, down by 6 per cent on the previous year. However, this compares favourably when put in the context of the low interest rates we earned on our capital reserves and a fall of 6.2 per cent in the UK’s overall farming income.

We invested over £9.2 million in new works and improvements on the estate. In Scotland alone, the task of restoring and repairing property damaged by the harsh winter conditions will require over £1 million of investment.

The ongoing restructuring of the estate resulted in the completion of strategic disposals valued at £19 million, including the sale of a site to Aldi at Neats Court in Kent and of Bronydd Mawr in Powys.

The rural estate continues to help conserve the biodiversity of the UK. During National Tree Week our teams joined local volunteers to plant approximately 4,000 trees, and we continue to engage with partners, including Defra, Natural England and their counterparts in Scotland and Wales.

The Windsor Estate enjoyed 12 months of steady progress, bolstered by an increase in revenue which reduced the deficit to a level below that of recent years. Revenue on the estate was £6.6 million, up 4.8 per cent on the previous year. Capital value was £176.6 million, up 6.7 per cent, and the net operating deficit is some 20 per cent lower than that recorded in the previous year.

The year’s highlights include the installation of a new waste handling system, which has reduced the amount of waste the estate sends to landfill by 85 per cent, and the opening of a new Rose Garden at The Savill Garden.

While The Crown Estate’s core objective is to remain profitable, we combine this commercial imperative with a firm commitment to our values of integrity and stewardship. Sustainability continues to be key to our organisation and informs the actions we undertake. Our new sustainability strategy was rolled out internally during 2009/10 and will be launched externally in the coming year.

The full annual report and accounts for 2009/10 can be visited at:

 External site icon  Annual Report and Accounts

  • Footnote

Under the terms of the Crown Estate Act, The Crown Estate cannot borrow which means that we cannot invest in the same range of vehicles as other commercial property companies.  Therefore, we are more exposed to the exceptionally low level of interest rates we earn on our capital reserves (in 2009/10 we earned £6.3 million in interest compared to £22.6 million the previous year).

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