The Crown Estate reports records profit

The Crown Estate earned a net profit (income surplus) of 230.9 million in the year ending 31 March 2011, up 9.6% on the previous year. This marks a record return for the business, which pays its profit to the Treasury for the benefit of the nations finances.

For the first time The Crown Estates total property value has reached more than 7 billion, rising in the year by 12.9%. Total capital value of the Estate now stands at 7.3 billion, up 9.2% on the previous year. The Crown Estate total return as measured by IPD was 16.3%, outperforming its bespoke benchmark of 12.8% by 3.5%.

Earlier this year, Chief Executive Roger Bright announced that he is to step down at the end of December 2011. During his 10 years as Chief Executive, the value of The Crown Estate has increased by over 3 billion and it has paid nearly 2 billion to the Treasury.

Sir Stuart Hampson, Chairman of The Crown Estate, said: This has been another tremendous year of activity and achievement for The Crown Estate. During Rogers tenure as Chief Executive, The Crown Estate has been transformed into one of the UKs most successful property businesses, one which has not only delivered spectacular results including nearly 2 billion of profit to the Treasury, but also demonstrates clearly that entrepreneurialism and flair can thrive in a public body.

Roger Bright added: This has in many ways been a landmark year for The Crown Estate. Whilst we remain cautious about the prospects for 2011 and beyond, this year we have seen our results bounce back, reporting a record year in profits and a capital value that stands at the highest level in our history.

Among the years many highlights, the most notable is the agreement of a 1.8 billion property partnership on Regent Street. This will drive our performance for many years, not just by bringing our partners capital alongside ours to continue our improvement programme in Regent Street, but also by enabling us to invest actively across our diverse portfolio, including in St Jamess, in prime retail outside of London, and in the nascent wind, wave and tidal energy industries.

During the year The Crown Estate continued to deliver on its investment strategy. The Urban Estate set out plans for a 500 million regeneration programme in St Jamess and continued rebalancing its commercial holdings by investing over 250 million in what is now a 1 billion portfolio of prime retail properties outside of London; this comprises 16 assets including retail parks in Liverpool, Nottingham, Portsmouth and Hemel Hempstead, and two major joint ventures at the Westgate Centre in Oxford, and Princesshay Shopping Centre in Exeter.

At a time when competitors have ceased or substantially reduced development activity The Crown Estates long-term approach has seen it invest 87 million during the year in redevelopment: The Quadrant 3 scheme at the former Regent Palace Hotel is set to complete in autumn this year, on budget and four months ahead of schedule, and work at the St Jamess Gateway scheme is also now well underway.

A 32% uplift in the value of The Crown Estates marine estate largely reflects the progress it has made in the renewable energy sector, in which it continues to help developers realise the huge potential of the UKs energy-rich coastal waters. The Crown Estates most recent offshore wind farm development programme, Round Three, remains on track. Construction of its Round 1 offshore wind programme is almost complete and operational, and more than half of the projects in Round 2 are either under construction or operational. This year Rounds One and Two also benefited from project extensions which could create over 2GW of additional renewable energy for the UK enough to meet the electricity needs of 1.4 million homes.

In line with its strategy, the rural estate, which exceeded 1 billion in capital value for the first time, continued to take an active approach to its portfolio, carrying out a number of transactions, using profits to seize opportunities, make strategic purchases and add value to its existing holdings; this included the disposal of the Garton on the Wolds estate in Yorkshire and the acquisition of Threshelfords Farm at Feering in Essex. In addition, following extensive consultation with local communities, major planning applications have been submitted at Bingham, Nottinghamshire, and Taunton, Somerset, which together have the potential to deliver over 1,500 new homes, a significant number of local jobs, and a substantial capital value for The Crown Estate.

Financial highlights by estate:

On the urban estate the value of the portfolio increased by 11.6% to 5.2 billion. Activity in the capital markets was reflected by the fact that the commercial portfolio outperformed the IPD Quarterly benchmark (IPD Universe) by 3.6%, delivering a total return of 14.9%.

On the marine estate revenue increased by 1.7% to 47.4 million. Total property value rose to 586.9 million, up 32.3% on the previous year and delivering a 36% total return. There was an increase in income from renewables, which rose by 34.6% to 3.5 million as work to facilitate and enable this fledgling industry gathered momentum. The coastal estate, which includes marinas, ports, and harbours, added 14.3 million in revenue, an increase of 8.5%.

The capital value of the rural estate has exceeded 1 billion for the first time, rising by 8%. Active asset management has seen revenue rise this year by 2.4% to 25.7 million, delivering a total return of 12.1%.

• The Windsor Estate enjoyed another year of progress. Revenue rose by 3% to 6.8 million, and capital value rose by 5.3% to 185.9 million.

The full annual report and accounts for 2010/11 can be viewed at http://www.thecrownestate.co.uk/annual-report/, from 00.01, 7 July, 2011.

In conjunction with IPD (Investment Property Databank) The Crown Estate has developed a bespoke benchmark to more accurately reflect its performance against a similar portfolio of properties.

The Crown Estate manages a highly diverse property business valued at more than 7 billion.

We pay our surplus revenue (profit) to the Treasury for the benefit of the nation every year: in 2010/11 this was 230.9 million. Over the past ten years The Crown Estate has paid nearly 2 billion to the Treasury.

• Our objectives, which are laid down by Parliament under the Crown Estate Act 1961, include enhancing the value of the estate and the revenue it produces.
• The responsibilities of The Crown Estate are to maintain and enhance the value of the estate and its income over the long term and to do this having regard to good management. In summary, The Crown Estate is a successful business organisation guided by our core values commercialism, integrity and stewardship.
• The Crown Estate manages a diverse property portfolio which includes office, retail and industrial premises; housing; farmland; forestry and minerals; parkland; and around half the foreshore and almost all the seabed around the UK.
• The Crown Estates property comprises four estates: Urban, Marine, Rural and Windsor.

Separate reports covering financial highlights for activities in the devolved administrations will be available towards the end of July. For the first time we have asked the National Audit Office to review the financial information contained in these reports.