Regent Street landlord Crown Estate hangs on to cash to survive the pandemic
The Crown Estate, like other major landlords, is aiming to conserve as much cash as it possibly can and has delayed the payment of its annual income to the Treasury in the face of a shortfall in rent payments.
The property giant is different from other property firms in that it owns £13 billion+ worth of property on behalf of the Queen. Its income is paid to the UK Treasury with 25% of that making up the “sovereign grant” paid to the Queen.
The company received £345 million in net income in the year to the end of March which was up 0.4% year-on-year, The Times reported. The figure was a record and was driven by central London property disposals and lease negotiations. But the portfolio’s value dropped 1.2% to £13.4 billion due to a revaluation caused by challenging retail conditions.
The income rise came as the Crown Estate owns some of the UK's most valuable properties, including large parts of London's West End. But the return of that income to the state/Queen is being delayed this year. It paid £87 million in July and will only make further payments as trading conditions develop, the newspaper said.
The company has made provision of £12.9 million for income it doesn't expect to receive due to Covid-19 disruption. At the moment, while its office tenants have paid most of their rents, almost half of the rent owed by retail tenants hasn't been paid since the end of March.
CEO Dan Labbad told the newspaper: “What we are focusing on is making sure we are working with tenants on a case-by-case basis to support them where necessary — changing leasing arrangements where it works. We are not looking at a big line-up of tenants looking to come into the portfolio at the moment and so resilience is incredibly important. Working collectively on how we ensure that resilience is key.”
Labbad didn’t issue any forecasts, apart from saying that property income would be significantly down. However, he added that the estate has no debt and it has a diverse portfolio that should carry it through the pandemic.
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