2023 Annual Report

September 2023: Howard de Walden Estates Holdings Limited (‘Howard de Walden’ or the ‘Company’), the property business that owns and manages a portfolio of mixed-use property across Marylebone, including both Marylebone Village and the Harley Street Medical Area, today announces its financial results for the year ended 31 March 2023.

Highlights:

• Rental income increased by 9.2%, from £135.4m to £147.8m as the company continues its recovery from the impact of the COVID-19 pandemic
• Profit after operating costs of £99.3m versus £88.4m in 2022
• Revenue profit before tax increased 16.7% from £64.2m to £74.9m1
• Pre-tax loss of £102.3m included a £199.5m loss from revaluing investment properties
• £186.7m decrease in investment property values, from £4.636bn to £4.449bn (down 4.0%)
• Property values decreased by 4.3% on a like-for-like basis2
• £120m decrease in net assets from £3.191bn to £3.071bn
• Net debt decreased from £572.3m to £552.3m (gearing was 18.0% at 31 March 2023)
• Charitable and community support contributions have increased by 34.1% since 2020 to £1.0m
• Strong financial position with £260.7m of cash and undrawn facilities at 31 March 2023

1. The Company’s preferred measure of profitability. 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.

Rental income increased 9.2% to £147.8m due to a strong performance across all of Howard de Walden’s main sectors, underpinned by the double-digit growth recorded in its Office and Residential portfolios. The Healthcare and Retail portfolios also saw positive growth during the year.

Office income increased by 10.7% driven by an increase in lettings throughout the year, bouncing back from 2022 when occupiers increasingly exercised their right to terminate leases as working from home took hold during and after the pandemic. Residential income saw growth of 10.2%, due to strong demand with occupancy levels maintained at near 100% for the duration of the year. Healthcare income also continued to grow, as demand for space remained high throughout the year resulting in an increase of 9.7% against the prior year. Healthcare income continues to represent over 40% of total income across the portfolio. Retail income rose by 7.5% compared to the previous year. This was underpinned by strong occupier demand and trading, which was reflected by a recovery in footfall.

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 down 4.0% on an overall basis to £4.449bn and a decrease of 4.3% when capital additions and disposals are excluded.

The pre-tax headline loss of £102.3m was significantly lower than the previous financial year’s profit (2022: profit £199.8m). This was solely due to the decline in property values, while underlying profitability, including operating profit and revenue profit, significantly increased when compared with the previous year.

Howard de Walden Chairman, Sir William Proby, commented: “Our strong trading performance in 2023 reflected a return to everyday life as the COVID-19 pandemic waned in 2022, leading to a sustained recovery in commercial activity.

“Our growth in rental income and gross profit was impressive when set against a challenging geopolitical and economic backdrop, demonstrating the resilience of our location, our strategy, and the effort of our colleagues. Last year, like many businesses, we were impacted by wage inflation and rising costs. However, our teams have worked extremely hard to deliver a performance for which the Board and shareholders are extremely thankful.

“The pandemic created an unprecedented demand for community support and in recent years we have substantially increased our financial contribution to help. This year, our total was £1.0m, an increase of 34.1% since 2020. The positive impact that our support and volunteering have in our local communities is something that we are very proud of.”

Howard de Walden Chief Executive, Mark Kildea, commented: “After two years of pandemic disruption, this year has been one of continued recovery. The long-term decisions that were made during 2020 and 2021, including significant investment into refurbishing and redeveloping buildings, alongside carefully targeted support for our customers, has allowed the business to record its highest ever turnover. The positive impact is also reflected in our key metric of revenue profit returning near to pre-pandemic levels.

“Our efforts and strategy remain focused on growing long-term sustainable profits and meeting our sustainability requirements. We are confident that we are well positioned to meet these challenges, with significant financial capacity, high occupancy levels and a dedicated and motivated workforce in a unique and desirable part of London.”