Another record breaking year with £285 million return for public finances

The Crown Estate, an independent commercial business, created by Act of Parliament, has today announced another record return for the benefit of the public finances and an overall performance which is significantly ahead of the market, as our portfolio value hits an all-time high.

24 June 2015

Regent Street, west end of London
Hemel Hempstead strategic land development

Results summary

  • Record return to Treasury for the benefit of the public finances: £285.1 million, up 6.7% on 2014 and 50% over ten years
  • Capital value at a historic high: £11.5 billion, up 16.1%; Property value of £11.0 billion, up 16.7%
  • Market beating total return: 20.8%, against a 18.4% bespoke benchmark and a 17.1% IPD universe; 3 year total return of 17.3% against  a 15.1% bespoke benchmark and 11.1% IPD universe; and 5 year total return of 17% against a bespoke benchmark of 14.4% and IPD universe of 10.2%.
  • Partner funds managed in strategic joint ventures: up 60% from £968 million to over £1.5 billion
  • Beyond financial return: living wage accreditation achieved during 2015; over 1,000 people placed into work through the Recruit West End programme.

Key performance drivers for 2015: a historically high development pipeline in London’s West End and regionally; the growth of the offshore wind portfolio; strategic partnerships to provide working capital; increasing value of standing investments in the business’s core sectors; and the sale of non-core assets into strong markets.

Sir Stuart Hampson, Chairman, said: “The Crown Estate has raised the bar with another year of record breaking profits. These results prove that our long-term outlook and active asset management in our core sectors continue to ensure that The Crown Estate remains an outstanding UK success story.”

Alison Nimmo, Chief Executive, said: “This year we’ve continued on the path of success, outperforming the market and delivering significant value beyond financial return. Over ten years we have nearly doubled the value of the business by delivering world leading business destinations and 21st century retail experiences, driving investment in the UK’s renewable energy industry and actively managing one of the nation’s largest rural land portfolios.”

A strong business model with high-quality, actively managed assets

The Crown Estate’s record performance is grounded in our business model and investment strategy, which focuses on carefully chosen key sectors, where we enjoy critical mass and high levels of expertise: London’s West End; prime regional retail; offshore wind; rural strategic land. During the year we undertook:

  • Nearly £1 billion of capital activity, which comprised £326.9m in acquisitions and other investments and £179.1m in development and asset management. For example:
    • £345.5 million purchase of Fosse Shopping Park in Leicester with Gingko Tree; this was the largest single asset purchase in The Crown Estate’s history.
    • development commenced at the £80 million Banbury Gateway fashion park.
    • Disposals totalling £451 million, including: in London (an interest in the Four Seasons hotel in Park Lane); regionally (industrial estates in Taunton and Isleworth and Apsley Mills Retail Park in Hemel Hempstead); and on the rural portfolio (farm and residential sales).

Active asset management grounded in place-making at its best

Active asset management and place-making through development have underpinned The Crown Estate’s strategy. We continue investing in the creation of world-renowned destinations for shopping, leisure and business, from retail parks in the North East and North West, to business destinations in the West End.

  • Development pipeline: with 615,000 sq ft of West End development currently onsite, the development pipeline is the largest in our history.
  • Office: we have continued to benefit from our on-going delivery of new high-quality office space for global businesses, into strong occupier markets in Regent Street and St James’s. With 400,000 sq ft coming to market in the coming year, during 2016 we will deliver 50% of total office supply in the core West End.
  • Retail: West End voids remained at 0% and flagship lettings included to iconic international brands, Uno de 50; Hunter; Goat; Michael Kors; Bike Rooms; Arc’teryx; La Martina.
  • Regional retail: now one of the largest direct owners of prime retail parks with a £1.5 billion portfolio, which benefited from voids of just 2%. We focused this year on bringing the approach to progressive management in this sector, as we are known for in the West End of London.
  • Strategic land: consents were secured during the year for 2,410 new homes across the portfolio.
  • Aggregates: marine aggregate extraction generated returns of £17.1 million and valuation increased by 16 per cent to £137 million, reflecting the on-going recovery of the UK construction sector.

Sustained growth for the UK’s world-leading offshore wind industry

With the UK remaining the most attractive place to invest globally in offshore wind, The Crown Estate’s offshore wind portfolio has continued to be a key driver of our commercial success. Generating income by leasing the seabed to developers, the business continues to take an active approach to management and unlocking value by capitalising on our strategic overview to identify common challenges facing industry, bringing the sector together to share knowledge, best practice and reduce costs. Key highlights included:

  • The business’s operational offshore wind portfolio generated £19.1 million, up from £15.6 million last year, with portfolio value increasing by 18% to £590 million.
  • Offshore wind currently meets over 4 per cent of the UK’s electricity demand. It is on course to meet around 10 per cent of UK’s electricity demand, and bring costs down below £100 per MWh, by 2020.
  • A total of 4.6 GW of operational offshore wind, with 813 MW of new offshore wind farm capacity last year accounting for more than half of all new installations across Europe.