Annual Report 2012 - Cadogan

CHIEF ExECUTIVE’S REVIEW 31 DECEMBER 2012
Property Portfolio
investment Performance highlights
• total property portfolio value grew to £3.88 billion
Increase of 9.0% adjusting for purchases and sales
• Residential portfolio increased in value by 7.6%
• Commercial portfolio gained 10.1%
Retail portfolio increased by 13.4%
Office portfolio increased by 4.6%
The outstanding performer in terms of capital value growth
was our retail portfolio, while the residential portfolio, which
performed so strongly in 2011, showed a slowdown from
the rapid growth of the previous year. Rental growth at the
north end of Sloane Street was the prime factor in improving
our retail values and demand for our best retail locations
remained strong throughout the year. Prime central London
residential property continued to benefit from international
demand and limited supply availability, but the increases
and changes to Stamp Duty Land Tax, announced in the
2012 budget, which created considerable uncertainty in the
marketplace, undoubtedly had a dampening effect on
activity levels and sentiment in the market.
acquisitions a nd Disposals
We were active in the retail, office and hotel sectors
acquiring a number of interests at a total cost of £139
million. Included within this total was a head leasehold
retail interest in Sloane Street, an office building off the
Kings Road and the head lease and business of the boutique
hotel at No. 11 Cadogan Gardens. All these acquisitions fit
well with our strategic priorities and will enable us to
enhance our returns over the medium and long term. We
were able to utilise the substantial cash balances which
had built up during the course of the year to fund the
major part of these acquisitions. The balance was financed
through a drawdown from one of our standby facilities.
In a quieter residential market, we acquired fewer long
lease residential units than we have in recent years. We
purchased one house and 13 flats at a total cost of just
over £22 million. We acquire residential properties to
enable us to consolidate our ownership, particularly in
key mixed-use buildings and to expand our portfolio of
market let residential units.
Sales of residential properties through the Leasehold
Reform Act process continued at a steady pace and
totalled just over £90 million (2011 - £83 million). We
completed on the sale of 108 units (2011 – 104 units). The
profit achieved over the previous year’s valuation was
£16.3 million, slightly less than the figure of £17.1 million
achieved in 2011.
We have continued to receive a steady level of
enfranchisement claims since the beginning of 2013.
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