West End Property Swaps
Demonstrating its innovative approach to adding value to its Regent Street portfolio, The Crown Estate this year completed two major Regent Street property swaps, first with the Pollen Estate (Pollen) and then with Great Capital Partnership (GCP). The GCP swap completed in February 2008 and was hailed as the largest property swap transaction in the West End ever, involving 580,000 sq ft of prime West End property, valued at over £350 million. The £100 million+ Pollen swap completed in December 2007. The GCP and Pollen deals together unlock over 1 million sq ft of development potential on Regent Street, expanding significantly the scope of The Crown Estate’s investment programme to reinvigorate Regent Street and its buildings.
Expansion of Offshore Windfarms
In 2007/08 activity in offshore windfarms increased significantly. The generating capacity of offshore windfarms increased to about 500MW, with ongoing expansion reaching 1,000MW within the next year and over 2,000MW by 2010. Two new windfarm sites were granted consent – Gunfleet Sands, off the Essex coast and a project at Teeside. Following the announcement in December 2007 by John Hutton, the Secretary of State for Business, Enterprise and Regulatory Reform, of the Government’s intention to begin a strategic environmental assessment into further delivery of up to 25GW of offshore wind energy by 2020, The Crown Estate is working with industry on ways of facilitating this.
Tabley Estate
During the year we successfully completed the purchase of the Tabley estate in Cheshire from The University of Manchester. Comprising 1,460 hectares (3,608 acres) in north east Cheshire, the Tabley estate includes 18 equipped farms, a further 18 lettings of farmland, three land parcels let as grazing, 52 residential properties, 13 commercial leases, the Cheshire Showground and a number of sporting agreements. This acquisition represents a unique opportunity to add to our rural estate holdings and underlines The Crown Estate’s commitment to remain a major rural land owner.
Reducing CO2 Emissions
A target was set to reduce CO2 emissions by 3% in those parts of the urban estate under our direct control, compared with last year’s figures. Taken on a like-for-like basis, we achieved an overall reduction of 19% in CO2 emissions from a total of 45 buildings. We have instructed all our urban managing agents to purchase Climate Change Levy Exempt energy for our close managed portfolio – subject to contractual terms and costs. To date this has been procured for 30% of the portfolio – a major factor in the reduction of carbon emissions.
Acquisition of Deganwy Marina
We completed our first direct acquisition of a marina which has expanded our portfolio of marinas to include wholly-owned facilities branded with The Crown Estate and operated through contracted partnerships. Bought from Interguide Investment Holdings, the 165-berth marina is set in the village of Deganwy amongst the beautiful surroundings of the North Wales coastline, and has superb sailing waters. The marina will be leased to Quay Marinas and will operate as Deganwy Quay Marina, with the office and retail space leased to Majestic Yachts. This is our first direct investment in Wales and the first acquisition made as part of our new marine investment programme. This purchase increases our exposure to the marina sector in north Wales and complements our interest in the nearby Conwy Marina, also run by Quay Marinas.
Rural ‘Business Deal’
In 2007, a series of business development meetings were held between The Crown Estate, managing agents and tenants. These focused on how improvements could be made to the landlord-customer relationship to lead to enhanced business opportunities. This project has concluded with the formation of a ‘Business Deal’ that proposes terms for a modern relationship between landlord and tenant as well as initiating a framework for co-investment. It states, among other things, that The Crown Estate will provide online information, and make available capital for viable co-investment projects, and requires tenants to give early warning where business change is anticipated and report any property issues as soon as they arise.
Customer Focus Programme
In 2007/08 we initiated a customer focus programme to improve our performance in the area of customer service. We identified two particular strands to pursue: business efficiency and business development. Working with managing agents from each estate, we are testing and developing specific ideas in pilot areas in the south west of England (rural), west of Scotland (marine) and St James’s (urban). We also involved colleagues from across the business in the design process by asking them to contribute their ideas about excellent customer service from their own experience as customers in their everyday lives.
The Royal Landscape
Turnover in excess of £1.5 million was generated from The Savill Building and The Royal Landscape in 2007/08 and despite the closure of the park for six weeks due to the nearby foot and mouth outbreak visitor numbers have increased to over 410,000 this year. In March 2007, we launched a new venture with Windsor Castle, offering joint tickets for the Castle and The Savill Building. Visitors have also been able to benefit from new facilities at Virginia Water with the opening of a new car park in March 2008. The Savill Building has continued to attract external recognition now winning 11 awards, together with being one of only two UK finalists in the RIBA Stirling Prize.
Stamford Street
We made our first major acquisition under our new residential investment strategy of a 58 unit apartment block at Stamford Street on London’s South Bank for £23 million, which was built for us by Crest Nicholson. This was the first major investment by The Crown Estate to supplement our traditional residential portfolio and is part of a strategy to replace assets that are sold to leaseholders through enfranchisement and lease extensions. It also reflects our objective to invest in areas with good rental and capital growth prospects.