2024 Annual Report
Financial results for the year ended 31 March 2024
A YEAR OF CONSOLIDATION AND CONTINUED INVESTMENT FOR THE FUTURE
9 September 2024: Howard de Walden Estates Holdings Limited (‘Howard de Walden’ or the ‘Company’), the 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 2024.
Highlights:
- Rental income increased by 3.0%, from £147.8m to £152.2m as the Company continues to refurbish and reposition its portfolio for the future
- Signed £35.4m of new lettings and 746 new leases recorded for the year; a 4.2% increase on 2023
- Profit after operating costs of £98.8m versus £99.3m in 2023
- Revenue profit before tax remained broadly flat at £74.6m compared with £74.9m1 in 2023 predominantly due to higher operating costs.
- Pre-tax loss of £254.2m included a £331.8m loss from revaluing investment properties Property values decreased by 8.2% on a like-for-like basis2
- Net debt increased from £552.3m to £604.1m (gearing was 21.5% at 31 March 2024)
- Charitable and local community support contributions were £0.9m
- Strong financial position looking forward with £204.3m of cash and undrawn facilities at 31 March 2024
- 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.
- Excludes acquisitions, disposals and capitalised refurbishment and development expenditure.
Rental income for the year increased 3.0% to £152.2m driven by growth in the Residential, Retail and Healthcare portfolios, which now represent a combined 77.2% of total income.
Residential income performed particularly strongly with an increase of 8.7%. Continuing on from the prior year, demand for residential properties remained high, leading to occupancy levels of close to 100% throughout the year. Retail, Leisure and Hospitality income saw growth of 7.0%, driven by new lettings, underpinned by strong demand from a diverse range of businesses. Occupancy levels here also remained high throughout the year with just a 3% vacancy rate at the year end.
Howard de Walden’s Retail portfolio is an integral and defining part of Marylebone Village, and often features in residents’ and businesses’ reasons for locating to the area. Healthcare income – a unique and differentiating part of Howard de Walden’s estate - grew by 2.0%, with demand for space outstripping the limited availability. The sector represents 40% of the total rental income for the Group.
Office income declined by 3.6%. This was largely due to the portfolio repositioning as our workplace options increased in line with our evolving strategy, which includes a wider variety of lease options and the newly launched flexible office brand Elmtree. It also reflects ongoing investment in the traditional portfolio in order to meet the market demand for enhanced fit-outs and new sustainability-related standards.
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, fell by 6.3% on an overall basis to £4.168bn as a result of higher interest rates and ongoing macro-economic uncertainty. This equals a decrease of 8.2% when capital additions and disposals are excluded.
The pre-tax headline loss of £254.2m was higher than the previous financial year (2023: loss £102.3m) as a result of the decline in property values.
Underlying profitability, including operating profit and revenue profit, was largely in line with the previous year. The Group has maintained a strong balance sheet and is well positioned for significant growth in income and value over the long term.
Howard de Walden Chairman, Sir William Proby, commented: “During a period of consolidation, there have been exciting initiatives over the last 12 months. We are increasing investment to reposition our buildings towards uses with the highest potential for growth in income and capital. Higher interest rates, which now appear to have peaked, continued to adversely impact asset values in Healthcare and Offices and to a lesser extent Residential. Our teams have worked extremely hard to deliver a robust performance for which we are extremely thankful.
“We have come through a testing time over the last four years. However, there are signs that we may have reached, or are very close to, the bottom of the current property cycle. Our strong financial position means we can expect good opportunities for the Estate to prosper.
“We are proud to continue our support of local community groups and always look to add to financial contributions through partnering and volunteering at events held throughout the year.”
Howard de Walden Chief Executive, Mark Kildea, commented: “This year we have invested into areas where we expect significant opportunities to grow net rental income and position for the future. We have made excellent progress against our strategic objectives, including the successful delivery of several high-quality developments across all sectors, launching our flexible office brand Elmtree, and we are now moving forward with our initiative to attract health technology innovators with three buildings currently under refurbishment.
“In addition, we published our sustainability strategy, deCarbon in October 2023. The plan sets out short-, medium- and long-term priorities, all designed to ensure that the Group achieves its net zero objective by 2040.
“Our efforts 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.”
To read the 2024 Annual Report, please click here.
