Round 4 record investments bolster Crown Estate's revenue

The Crown Estate has announced a net revenue profit of £269.3 million for the financial year 2020/21, representing a decrease of 21.9% on previous financial year.

It recorded a 12-month total return of 11.9%, outperforming annual bespoke benchmark of -2.9%. This year’s performance was partly attributed to the impact of recent Offshore Wind Leasing Round 4. If this is excluded, the 12-month total return comes to -3.2%, 0.3 percentage points below the annual bespoke benchmark.

The value of the Crown Estate's portfolio increased by 7.5% to £14.4 billion. This was reportedly driven by two main factors including an increase in the Marine portfolio of £2.1 billion primarily as a result of valuing Offshore Wind Leasing Round 4 for the first time. This was offset by a decrease of £1.1 billion in capital values, predominantly as a result of the performance of retail assets in London and Regional portfolios as the pandemic accelerated trends in those markets.

Dan Labbad, Chief Executive of the Crown Estate, said: “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 ten years and building a portfolio valued at over £14 billion.

“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.

“Looking ahead, we know that the same things that have underpinned our past success are not the same things that will secure a sustainable future. Informed by our purpose to create lasting and shared prosperity for the nation, we have set out an ambitious new strategy designed to set us – and our customers – on a path to long-term growth in the broadest sense. This will see us continue our commercial success while using our impact to create a more sustainable and inclusive society.”

In 2021, the Crown Estate concluded the competitive tender process of Offshore Wind Leasing Round 4, identifying six potential new offshore wind projects in England and Wales. These projects (which are now progressing to an environmental assessment known as Plan-Level HRA) could deliver a further 8 GW of offshore wind power.

The Crown Estate stated that its Round 4 projects achieved record investment from developers with successful bidders committing an initial investment of £879 million in option fee deposits. Reflecting this, valuation of our Marine Portfolio has risen to £4.1 billion (an increase of £2.1 billion).  Income from Round 4 option fees will not be realised on its balance sheet until after the conclusion of the environmental assessment stage (known as Plan-Level HRA), with rights expected to be awarded in 2022.

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