Annual Report 2012 - Cadogan

CHIEF ExECUTIVE’S REVIEW 31 DECEMBER 2012
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Overview
This has been a successful year across all property sectors.
The value of the portfolio rose to £3.88bn (up 9%) and
gross rental income increased to £104.7m (up 5.6%), both
all-time highs. The business produced a profit before tax
of £57.3m.
The growth in values of 9%, after adjusting for acquisitions
and disposals, was led by our retail properties, up a shade
over 13%, while residential showed an increase of 7.6%.
We have been successful in acquiring a number of
properties within our traditional estate boundaries, with a
total value in excess of £160 million. All these acquisitions
enable us to further progress our estate management
strategies. The property market in central London and
particularly in Chelsea and Knightsbridge, has been strong
throughout the year. Demand from occupiers for both our
commercial and residential properties has remained healthy
and vacancy levels have stayed low.
We continue to adopt a long term approach to the way in
which we do business. This demands however that careful
attention is paid to the short term to ensure we are on the
right course and delivering competitive performance,
balanced with maintaining a long view of our interests
and the health and prosperity of the area in which we do
business.
We concentrate on the tight geographical area of Chelsea
and Knightsbridge. This focus means we know our markets
intimately. We have a high quality portfolio concentrated
on luxury retail and high end residential. We have an
innovative leasing approach which, on the one hand,
reflects our customers’ businesses and on the other, our
need to manage carefully each property for the benefit of
the whole. Our close relationship with our customers
allows us to understand their business needs and to
respond dynamically. Low levels of gearing and long term
financing mean we are able to, and do, respond rapidly
to opportunities to invest in new properties while
maintaining our refurbishment and redevelopment
programme.
We have a highly professional and proficient in-house
team managing the Estate and these people have
demonstrated their commitment and good work over the
past year for which I am immensely grateful. It is vital to
the business to continue to attract, retain, develop and
motivate talented people. This team is supported by bestin-class
external advisers to whom I also owe a great debt
of gratitude.
We have a genuine long term vested interest in the
area which underpins all that we do. We consider our role
to be one of stewardship, that is to improve the assets
for present and future generations. As such, we have a
responsibility to actively manage the environmental impact
of our activities. We also have a responsibility to the
communities we affect and to the occupiers of our
buildings. We are working hard to integrate our community,
customer and environmental principles into the heart of
the business and aim to be an organisation recognised as
both a good neighbour and one with which it is good to
do business. This makes Cadogan a more resilient business.
What does this mean in practice? One example is our
commitment to provide voluntarily 45 flats with a value
in excess of £20 million, which will be provided to key
workers at reduced rents. London as a world class city
needs to function and to do so it must be able to house
people of all incomes. There must come a time when
housing costs become a drag on the competitiveness of
the capital and this will require long term measures to be
taken now to avert future problems.
Another example is that Cadogan also owns and operates
Cadogan Hall, one of London’s leading concert halls and
home to the Royal Philharmonic Orchestra. As well as
contributing to a diverse mix of attractions for Chelsea’s
residents and visitors, the Hall does much more locally. It
plays a role in the local community, running a number of
events throughout the year specifically targeted at
supporting aspiring musicians, inspiring young people and
supporting other community groups.
There are many other examples of our environmental,
community and customer activities, a selection of which
have been posted to our website.
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