Crown Estate profit drops 22% as retail tenants struggle to pay rent

Crown Estate profit drops by a fifth as retail tenants struggle to bills
The Crown Estate owns the entirety of Regent Street in central London.
// The Crown Estate’s net revenue profit drops 21.9% to £269.3m
// Decline was largely because it was unable to collect all the rent it was owed, especially from retail tenants
// Crown Estate warns that further hits are likely as government support schemes for companies comes to an end

The Crown Estate is set to deliver less money to the Treasury this year due to the Covid-19 pandemic as many of its high street renters struggled to pay their bills.

The estate, which owns huge tracts of property across the UK – including retail property – said that net revenue profit had dipped 21.9 per cent to £269.3 million.

The decline was largely because the estate was unable to collect all the rent it was owed.

READ MORE: Regent Street owner The Crown Estate hit by string of administrations

It warned that further hits are likely as government support schemes for companies comes to an end.

The news will mean a considerably smaller payday for the Treasury, which collects all of the Crown Estate’s profit.

However, the Queen is unlikely to take a hit. Although the money she gets from the government – the Sovereign Grant – goes up if Crown Estate profits increase, it does not fall when they decrease.

“Whilst the challenges posed by the pandemic and associated economic impacts are clear to see in our results, drawing on a diverse portfolio we have continued to demonstrate both our strength and resilience, contributing £3 billion to the public purse over the last 10 years and building a portfolio valued at over £14 billion,” Crown Estate chief executive Dan Labbad said.

“What the pandemic has thrown into sharp relief is that challenge and uncertainty are the new normal and there is no doubt we will face another difficult year ahead, but with the progress of the vaccination programme and our collective resilience as a society, there is reason to be cautiously optimistic.”

All the money from the Crown Estate goes into the Treasury’s coffers rather than being paid to the Queen.

While the Crown Estate is not managed by the Queen, its income does have some bearing on how much money she is given each year.

Currently the Sovereign Grant is 25 per cent of the Crown Estate’s profits.

Since 2017 it has been temporarily increased from 15 per cent to pay for a major refurbishment of Buckingham Palace.

The Crown Estate body currently owns property worth around £14.4 billion, according to the most recent results.

Notable retail properties within the Crown Estate’s portfolio include the entirety of Regent Street, around half of St James’s in London’s West End as well as property in Oxford, Exeter, Nottingham, Newcastle, Harlow, and Swansea.

While its retail portfolio has been challenged in recent years, the estate has managed to find huge value in its offshore holdings.

The value of the Crown Estate’s portfolio increased by 7.5 per cent last year due to a £2.1 billion hike in its marine portfolio.

This offset the fall of £1.1 billion in the Crown Estate’s capital values.

with PA Wires

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