Queen’s coffers hit by high street turmoil

The Queen’s purse has been hit by a string of company collapses including PizzaExpress and New Look, showing that even royal finances are not immune from the turmoil on the UK’s high streets.

The Crown Estate, which manages the monarchy’s £13.4bn commercial property portfolio in the public interest, has suffered as retailers and casual dining chains restructure after pandemic lockdowns and restrictions crushed earnings, plunging many companies into administration.

The group was a creditor to high street chains Pizza Hut, PizzaExpress, Casual Dining Group and New Look, according to documents filed at Companies House, all businesses that have sought company voluntary arrangements this year. CVAs are an insolvency process that allows struggling businesses to negotiate their debts with creditors. 

The Crown Estate was owed a total of £4.2m from New Look, £1.2m from Pizza Hut; £234,861 from PizzaExpress; and £219,150 from Casual Dining Group, owner of Bella Italia, Las Iguanas and Café Rouge, according to the documents.

In its most recent annual results, the Crown Estate set aside £12.9m in provisions for bad debts expected to arise in 2020/21 from its tenants falling into administration.

The Crown Estate said: “There’s no doubt this is a difficult time for the retail and food and beverage sectors, and we’re particularly conscious of the impact it’s having in many cases on people’s jobs and livelihoods. We are working with our customers to offer them support where we can through this challenging period.”

Crown Estate has set aside £12.9m to cover bad debts from tenants such as Casual Dining Group, owner of Bella Italia © Tolga Akmen/AFP/Getty

The group owns large chunks of shopping districts including Regent Street in London and regional retail parks in Oxford and Northamptonshire, and joins other commercial landlords in seeing sharp drops in income as footfall has tumbled and tenants’ earnings have dried up. 

Sarah Mook, restructuring partner at Linklaters, said retailers were “taking advantage of leverage with landlords to negotiate lower or different rents”, adding that CVAs “have become a tool that’s being used more prevalently”. Lingerie chain Ann Summers on Friday became the latest retailer to announce plans for a CVA.

The Crown Estate returns its profits to the Treasury, which then allocates a portion of profits as “sovereign grant” to the Queen to cover the maintenance of a number of palaces. In the 12 months to March 31, it posted record pre-tax profits of £345m, but has since been caught up in the crisis hitting the high street. 

The group does not include the Queen’s private properties, such as Balmoral Castle and Sandringham House.

Announcing annual results in September, Crown Estate chief executive Dan Labbad warned that performance this financial year would be significantly affected by coronavirus, which he said would bring about “permanent structural shifts” in sectors in which the estate has substantial property holdings, such as retail and offices. 

Last week, both 242-year-old department store Debenhams and retail group Arcadia collapsed, becoming the UK’s biggest retail casualties of the pandemic and putting a total of more than 25,000 jobs at risk. Both high-street brands undertook CVAs last year, but the more favourable terms achieved as a result of those were not enough to ensure their survival.

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