The last financial year has been an active one for our large urban property portfolio. Our investment strategy has generated acquisitions and sales across the country and reflects the vigorous approach our asset management team has taken to rebalancing our property holdings with a view to strong, long-term financial performance.

Our urban portfolio consists of property across the UK. From extensive retail and office holdings in central London, particularly on Regent Street, shops and offices in Edinburgh, business parks in Cambridge and Guildford, shopping centres in the Midlands, and residential accommodation in London and Windsor, the urban portfolio demonstrates the wide diversity of our interests and experience.

The turnover from the urban portfolio was £188.6 million, up 2.9% on the previous year. This represents a good return and reflects both the strong performance of the property market and the good work of our asset management team. Capital value also increased to £4,556 million, a 21.8% increase over the previous year. These have combined to produce a total return of 24.8% driven by falling yields and expectations of rental growth.

Regent Street continues to be the focus for our investment programme and this year has seen some major achievements on the street, in particular the completion of the redevelopment of 185-191 Regent Street / 16 New Burlington Place, the home of our new corporate headquarters. This innovative and striking building provides modern, open-plan office space right in the heart of our core property holding. It is an exemplar of what is possible in a central London redevelopment, combining the best of modern architecture and the heritage of its surroundings. The building incorporates a number of important environmental features, including photovoltaic cells, combined heat and power units, chilled beam air-conditioning, grey water recycling and improved bicycle facilities for employees. New Burlington Place has been part pedestrianised, with trees and artwork installed to improve the surrounding public realm. Such features have led to the development being awarded an “excellent” rating in the Building Research Establishment Environment Assessment Methodology (BREEAM), an achievement of which we are proud.

This year has seen the final work on the restoration and redevelopment of 123 Regent Street, formerly known as the New Gallery. We have invested £4.5 million in restoring this building which is now home to a new Habitat flagship store. We are delighted they have chosen to open on Regent Street and we know they have shared our passion for the beauty of this building, which has a vaulted plaster ceiling, neo-Egyptian light fittings and an original working Wurlitzer organ.

Work has begun at 83-97 Regent Street in partnership with City and West End. This mixed-use scheme will provide new, flexible floor plates for retail and commercial space, a number of residential apartments on site and improved public realm on Swallow Street; improving the environment for the restaurants and bars in this area. This project is the first part of our ambitious redevelopment plans for The Quadrant at the southern end of Regent Street, which consists of the blocks either side of the famous curve adjacent to Piccadilly Circus. We have continued to develop our plans for the eastern side of The Quadrant in consultation with English Heritage, Westminster City Council and others, with a particular emphasis on improving the public realm in the area. We hope to submit a planning application in the coming financial year.

We have seen many new arrivals to the street during the year. New retailers have included Gerry Weber, Quiksilver and Kipling, and Mamas & Papas and Brooks Brothers are scheduled to open in the next financial year. Kaupthing Bank has taken five floors of office space at One Hanover Street, which along with the letting to King Sturge at 132-154 Regent Street, were two of the biggest office deals in the West End in 2005. This demonstrates that our investment programme is not only attracting the best in retailing to the street, but is realising Regent Street’s potential as a premier office location for major corporate businesses.

We continue to seek new and innovative ways to provide good customer service, in particular through Regent Street Direct (RSD), our facilities management and managing agent service for Regent Street provided by Cushman and Wakefield Healey and Baker. An example of good practice has been our popular six-page small office lease with fixed rent, fixed service charge, no dilapidations and three year term with six month tenant only break. Through RSD’s marketing this has been very successful with over 100 deals done in and around Regent Street in the last year.

We have sought to reduce our exposure to the central London office market by disposing of some of our holdings. In total we have disposed of around £75 million of central London offices, including our holding in Bedford Square, where the sale agreement was in solicitor’s hands at the end of the financial year. Most of these offices were in isolated sites and therefore had limited potential for future major redevelopment or investment. Where it is sensible to invest in existing assets we have done so and this has included refurbishment of offices on Jermyn Street, SW1 and has led to the letting of the final available floor of Fleet Place House in Holborn.


Our investment activity has led to some exciting acquisitions and sales on our regional property portfolio in 2005/06. The biggest deal was the purchase for £58 million, of 92 acres of Cabot Park in Avonmouth, near Bristol. Currently the site is Honda’s vehicle distribution centre in the UK and has excellent long-term strategic potential. In March 2006, we bought the freehold of 140-145 New Street in Birmingham for £21.75 million. This is a prime retail site in the centre of Birmingham adjacent to the redeveloped Bullring site and current occupiers include Adidas, Schuh and the Royal Bank of Scotland. Both of these acquisitions are important long-term investments and will contribute to The Crown Estate’s future financial performance. On the disposals front, Meudon House, an office building in Farnborough, was sold to a private client of HDG Mansur for £24.5 million.

Our regional portfolio has also seen significant investment in our existing assets. Substantial office refurbishments have been undertaken in Birmingham and Cambridge, and a third has begun in Guildford. Our regional retail holdings are benefiting from improved asset management, with the upgrading of facilities at the Gallagher Retail Park in Cheltenham and the appointment of ESA Design Ltd to develop proposals for the enhancement and improvement of the CrownGate shopping centre in Worcester for occupiers and customers alike. Capital value uplifts in our retail parks in Leamington Spa and Altrincham have been achieved through lease surrenders, renewals and re-lettings to key retail businesses including Halfords and Argos.

Our residential estate has a capital value of £645 million and ranges from the villas and terraces in Regent’s Park to affordable housing for key workers in Hackney, Millbank and Camden. This year has seen four major long leasehold sales completed with receipts of over £20 million and 52 completed leasehold enfranchisement claims with gross receipts of £4.8 million. We see further potential in the residential market and this may lead to interesting acquisitions in the next few years.