Rental income surges at Howard de Walden

The value of The Howard de Walden Estate has risen to almost £4bn and annual rental income has surged well beyond the £100m mark.

In results for the year to the end of March, the estate, which is centred in London’s Marylebone, was valued at £3.945bn, which represents a 6.3% like-for-like increase on the prior year.

Andrew Hynard, who recently joined from JLL to become chief executive of the estate, said yield compression was “less of a factor in this year’s valuation movement” and that the main factors were growth in rent and the value created by the development programme.

The rental income produced by the estate easily passed the £100m milestone, climbing 9.7% from £98m to £107.5m. The income growth helped drive a 20.1% jump in revenue profits before tax to £61.4m.

Hynard said demand for property in the Harley Street Medical Area remained “robust” and highlighted significant lettings including a deal that the estate agreed terms on shortly after the financial year-end with German hospital group the Schön Klinik to occupy its 54,500 sq ft redevelopment at 66 Wigmore Street.

Stronger demand for medical occupation has resulted in the estate changing the use of buildings from office to medial use. To help balance out the portfolio and increase the portion of rent from offices, it purchased a 49,500 sq ft office building at 7-10 Chandos Street in the summer for about £68m.

The deal was financed with additional borrowing although gearing levels are low - at year-end gearing stood at 10.6%.

During the year, the net asset value of the portfolio increased by £283m to £2.999bn.

After the year-end, in September Howard de Walden completed a private placement raising £100m from US investors at a fixed rate of 2.6% on debt maturing in 15 and 20 years.

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