The offshore wind leasing round four (R4) has boosted the Crown Estate’s total return performance to nearly 12% as reported in its 2020/2021 results.
Excluding R4, the 12-month total return would have been -3.2%, 0.3 percentage points below the annual bespoke benchmark.
The value of the portfolio increased by 7.5% to £14.4bn, driven by an increase in the marine portfolio of £2.1bn primarily as a result of valuing R4 for the first time.
This is offset by a decrease of £1.1 bn 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.
Net revenue profit for 2020/2021 was £269.3m, representing a decrease of 21.9% on previous financial year.
In 2021 the Crown Estate concluded the R4 competitive tender process, 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 8GW of offshore wind power.
The R4 projects achieved “record investment” from developers and a major vote of confidence in the UK’s green economy, with successful bidders committing an initial investment of £879m in option fee deposits.
Income from R4 option fees will not be realised on the balance sheet until after the conclusion of the environmental assessment stage (known as Plan-Level HRA), with rights expected to be awarded in 2022.
Crown Estate chief executive Dan Labbad 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 £3bn to the public purse over the last 10 years and building a portfolio valued at over £14bn.
“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.”