2022 Annual Report
Financial results for Howard de Walden Estates Holdings Limited 'Howard de Walden' for the year ended 31 March 2022
Highlights:
- Rental income increased by 2.7%, from £131.8m to £135.4m, as the company recovers from the impact of the COVID-19 pandemic
- Profit after operating costs of £88.4m versus £87.3m in 2021
- Pre-tax profit of £199.8m including a £129.2m gain from revaluing investment properties
- Revenue profit before tax, increased 0.9% from £63.6m to £64.2m1
- £90m increase in investment property values, from £4.546bn to £4.636bn (up 2.0%)
- Valuation increased by 1.0% on a like-for-like basis2
- £86m decrease in net assets from £3.277bn to £3.191bn
- Net debt decreased from £629.1m to £572.3m (gearing of 17.9% at 31 March 2022)
- Charitable and community support contributions increased by 46.5% since 2020 to £1.2m
- Strong financial position through cash and undrawn facilities
1. The Company’s preferred measure of profitability as it excludes the variable impact of gains and losses on disposals and the annual revaluation of assets and liabilities
2 Excludes acquisitions, disposals and capitalised refurbishment and development expenditure in financial year
During the year, rental income increased 2.7% to £135.4m. The rental income uplift was due to a recovery in income from Howard de Walden’s Retail and Residential sectors, that were the most severely impacted by the pandemic, and continued growth in income from its countercyclical Healthcare sector. These increases were partly offset by a decrease in Office sector income which has been the slowest to recover from the pandemic.
After a decrease of 29.0% in the previous year, Retail income increased by 19.1% as an immediate recovery was seen as lockdown restrictions were lifted. Residential income also saw a good recovery increasing by 0.7%, as demand for homes increased as people returned to cities for work and study. Our Healthcare income continued to grow, as demand for space remained high throughout the year resulting in an increase of 7.9% against the prior year. Healthcare income now represents over 40% of our total income.
While demand for office space is recovering, voids from the previous year led to a 12.2% decrease in income year on year. The Office sector has been the slowest to recover as occupiers have continued to re-assess their space requirements, resulting in longer void periods on available space.
During the financial year, the value of the investment properties, which encompass the renowned shopping destination of Marylebone Village and the world-class medical hub of the Harley Street Medical Area, was up 2.0% on an overall basis to £4.636bn, but 1.0% when capital additions and disposals were excluded.
The pre-tax headline profit of £199.8m was significantly higher than the previous financial year profit (2021: loss £101.8m) because of the increase in value of investment properties. Increases in Retail, Office and Healthcare portfolios were the key drivers behind the valuation increase but were partly offset by a small decrease in the Residential portfolio.
Howard de Walden Chairman, Sir William Proby, commented: “I am pleased to report that in 2021/22 our rent roll recovered well from the worst point of the pandemic. Footfall in Marylebone, a retail and healthcare destination with a largely resident population, has improved quicker than other parts of central London.
“Although in many ways the country has made a good recovery from the pandemic, with life getting back to something resembling normal, it has become apparent that there will be some long-lasting if not permanent consequences. In addition, we are facing the bleak economic prospect of high levels of inflation, rising interest rates and poor growth. However, with conservative levels of borrowing and a large amount of interest rate protection, our business is well placed to withstand further economic shocks. We are also well positioned to weather a recession and to take advantage of growth opportunities when the macroeconomic climate allows.
“During the year, in response to unprecedented requests for support, our financial assistance to charitable and community causes increased to £1.2 million, an uplift of 46.5% since 2020. This included £0.2 million for subsidised accommodation provided to key workers in healthcare who work in the Marylebone area. It is in the ethos of our Family Shareholders, Board, and colleagues to support good causes that are connected to the communities we operate in and interact with.”
Howard de Walden Chief Executive, Mark Kildea, commented: “We took decisive action in managing COVID-19 – helping customers most affected by lockdowns and supporting our communities more than ever. This has been reflected in our financial recovery and the achievements made over the last year. We are particularly pleased by the bounce back in our retail portfolio and the consistent growth of our counter-cyclical healthcare offering.
“Increasing our financial resilience over the last 12 months means that we are now better placed to withstand any downturn while remaining confident in the long-term success of the estate.”
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