Queen set to sell part of prized Regent Street. The Crown Estate has opened "exploratory discussions" with potential investors about selling a minority stake in Regent Street, one of the world's most famous shopping destinations and a prized asset of the Queen.
Christmas lights in London's famous Regent Street
In an interview with The Daily Telegraph, Roger Bright, chief executive of the Crown Estate, said talks over its £1.6bn portfolio of shops and offices were at an "early stage" but that it hopes to have made "good progress" by the end of the year.
Rather than an attempt to cut the national debt, the proposed sale is designed to reduce the Crown Estate's exposure to Regent Street, which accounts for 25pc of the organisation's assets. The new capital will also be reinvested in developments across the portfolio.
Annual results for the Crown Estate, published today, show the Queen's property has bounced back from the recession by increasing in value by £600m to £6.6bn in the year to March 31. This compares to an 18pc decline in the previous year as property values in the UK collapsed. The results mean the Queen's property has performed in line with private-sector property companies.
The Crown Estate will now pay its profits of £210.7m into the national coffers. This is a decline on the £226.5m of last year, mainly because of lower interest rates being earned on the capital reserves of the Crown Estate, which is prohibited by law from borrowing.
Mr Bright said: "Our results should be read in the context of our obligation not to chase short-term income returns, and our statutory restrictions on borrowing, which increases our exposure to low interest rates."
The Crown Estate was created 250 years ago when George III surrendered profits from his property portfolio to the Government in exchange for a fixed annual payment from the Treasury, the Civil List.
The organisation owns 55pc of Britain's coastline, 360,000 acres of farmland, almost all of the seabed within the country's coastal boundaries, Windsor Great Park and Ascot racecourse. However, the majority of its assets are in a £4.6bn urban estate that, as well as covering Regent Street, includes shopping centres in Oxford and Exeter. These last two assets were purchased in the past year as part of plans to lessen the organisation's reliance on Central London.
The Crown Estate's tenants include Apple, fish farms in Scotland and utility companies looking to develop wind farms and offshore gas storage facilities designed to keep Britain's lights on over the next decade.
Because the 250-year-old organisation cannot take on debt under the 1961 Crown Estate Act, it has to seek alternative methods to fund investment in its portfolio. For example, the sale of a minority stake in Regent Street would enable it to support the £750m redevelopment of the district and ambitious plans to boost the St James's area.
Mr Bright declined to disclose who the organisation was talking with over a sale. However, in February, when he revealed the Crown Estate was considering its options, he cited sovereign wealth funds and pension funds as likely partners. Initial plans to spin off the Regent Street assets into a separate vehicle were rejected by the board last year.
A stake in Regent Street, the world's premier shopping street and now home to the likes of Apple and Ferrari, would be seen as a trophy asset for a foreign or domestic investors. Retail properties in the West End are already seen as attractive, with shops enjoying buoyant trading thanks in part to a weak pound boosting tourism.
Mr Bright, who has been in charge since 2001, said the new Coalition Government had given its backing to the strategy of the Crown Estate. This is despite an inquiry by the Treasury Sub-Committee concluding earlier this year that the organisation needed to "take more account of the wider public interest" in its activities.
The Crown Estate had been criticised by energy companies who claimed it was threatening the viability of offshore gas storage projects by demanding overpriced rents for the use of seabeds.
According to Mr Bright, the Government has not told the Crown Estate to cut costs despite plans for 25pc budget reductions across unprotected state departments. "We don't spend public money, we contribute to it," Mr Bright said. "We are aware of the climate of austerity, though, and are respectful of that."
The Government, whose dealings with the Crown Estate are led by Conservative MP Justine Greening, the Economic Secretary to the Treasury, has begun informal talks with the Crown Estate about allowing it to take on debt. Such a move will be given further impetus by the annual results, which show the interest made on the Crown Estate's capital reserves tumbled from £22.5m to £6.2m over the past year because of lower interest rates.
"The Act has done us well for 50 years but it was designed for another era," Mr Bright said. "We are not looking for unfettered borrowing that would allow us to leverage our performance, but modest borrowing powers to allow us flexibility to invest." ( telegraph.co.uk )
Christmas lights in London's famous Regent Street
In an interview with The Daily Telegraph, Roger Bright, chief executive of the Crown Estate, said talks over its £1.6bn portfolio of shops and offices were at an "early stage" but that it hopes to have made "good progress" by the end of the year.
Rather than an attempt to cut the national debt, the proposed sale is designed to reduce the Crown Estate's exposure to Regent Street, which accounts for 25pc of the organisation's assets. The new capital will also be reinvested in developments across the portfolio.
Annual results for the Crown Estate, published today, show the Queen's property has bounced back from the recession by increasing in value by £600m to £6.6bn in the year to March 31. This compares to an 18pc decline in the previous year as property values in the UK collapsed. The results mean the Queen's property has performed in line with private-sector property companies.
The Crown Estate will now pay its profits of £210.7m into the national coffers. This is a decline on the £226.5m of last year, mainly because of lower interest rates being earned on the capital reserves of the Crown Estate, which is prohibited by law from borrowing.
Mr Bright said: "Our results should be read in the context of our obligation not to chase short-term income returns, and our statutory restrictions on borrowing, which increases our exposure to low interest rates."
The Crown Estate was created 250 years ago when George III surrendered profits from his property portfolio to the Government in exchange for a fixed annual payment from the Treasury, the Civil List.
The organisation owns 55pc of Britain's coastline, 360,000 acres of farmland, almost all of the seabed within the country's coastal boundaries, Windsor Great Park and Ascot racecourse. However, the majority of its assets are in a £4.6bn urban estate that, as well as covering Regent Street, includes shopping centres in Oxford and Exeter. These last two assets were purchased in the past year as part of plans to lessen the organisation's reliance on Central London.
The Crown Estate's tenants include Apple, fish farms in Scotland and utility companies looking to develop wind farms and offshore gas storage facilities designed to keep Britain's lights on over the next decade.
Because the 250-year-old organisation cannot take on debt under the 1961 Crown Estate Act, it has to seek alternative methods to fund investment in its portfolio. For example, the sale of a minority stake in Regent Street would enable it to support the £750m redevelopment of the district and ambitious plans to boost the St James's area.
Mr Bright declined to disclose who the organisation was talking with over a sale. However, in February, when he revealed the Crown Estate was considering its options, he cited sovereign wealth funds and pension funds as likely partners. Initial plans to spin off the Regent Street assets into a separate vehicle were rejected by the board last year.
A stake in Regent Street, the world's premier shopping street and now home to the likes of Apple and Ferrari, would be seen as a trophy asset for a foreign or domestic investors. Retail properties in the West End are already seen as attractive, with shops enjoying buoyant trading thanks in part to a weak pound boosting tourism.
Mr Bright, who has been in charge since 2001, said the new Coalition Government had given its backing to the strategy of the Crown Estate. This is despite an inquiry by the Treasury Sub-Committee concluding earlier this year that the organisation needed to "take more account of the wider public interest" in its activities.
The Crown Estate had been criticised by energy companies who claimed it was threatening the viability of offshore gas storage projects by demanding overpriced rents for the use of seabeds.
According to Mr Bright, the Government has not told the Crown Estate to cut costs despite plans for 25pc budget reductions across unprotected state departments. "We don't spend public money, we contribute to it," Mr Bright said. "We are aware of the climate of austerity, though, and are respectful of that."
The Government, whose dealings with the Crown Estate are led by Conservative MP Justine Greening, the Economic Secretary to the Treasury, has begun informal talks with the Crown Estate about allowing it to take on debt. Such a move will be given further impetus by the annual results, which show the interest made on the Crown Estate's capital reserves tumbled from £22.5m to £6.2m over the past year because of lower interest rates.
"The Act has done us well for 50 years but it was designed for another era," Mr Bright said. "We are not looking for unfettered borrowing that would allow us to leverage our performance, but modest borrowing powers to allow us flexibility to invest." ( telegraph.co.uk )
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