KEK -the 17's!!! And comment — she NEVER LOSES INCOME??

"We Are Not Amused!"

Queen Of England Hurt By Commercial Real-Estate Collapse Tyler Durden Tue, 09/29/2020 - 05:00

Authored by Nick Corbishley via Wolf Street:

Crown Estates, which manages the Queen of England’s portfolio, recently wrote down the value of 17 shopping and leisure centers by 17%, cutting Her Majesty’s net worth by £552 million.

As The Economist points out, this is “fairly small beer” set against the £13.4 billion valuation of the Queen’s property portfolio, which includes some of London’s toniest real estate.

But the Queen will not be left out of pocket, since her income — set at 25% of the profits generated by the Crown Estate — will be topped up with a taxpayer bailout. In fact, thanks to the Sovereign Grant Act of 2011, the overall amount given to the Queen each year in order to fund her official duties is never allowed to fall, regardless of what is happening in the broader economy.

“In the event of a reduction in the Crown Estate’s profits, the sovereign grant is set at the same level as the previous year,” a spokesperson told The Independent.

“The revenue from the Crown Estate helps pay for our vital public services – over the last 10 years it has returned a total of £2.8 billion to the Exchequer.”

Any profits made by the Crown Estate are passed to the Treasury which, in turn, hands 25% of the profits back to the Queen through the sovereign grant. This year, the estate has struck an agreement with the Treasury that allows it to begin making “staggered” revenue payments to the government, thus keeping a larger share of the profits to itself.

It’s a nice deal if you can get it.

The U.K.’s ongoing retail crisis and work-from-home (WFH) revolution have between them wiped out roughly half of the market cap of large REITs..

Last week, the government extended its ban on evictions of commercial property tenants from September 30 to December 31, which angered some landlords who have seen the yields on their investments slide as businesses struggle to pay rent.

U.K. commercial property firms have so far collected just 68% of the rent they were due in June, according to data issued on Wednesday by Re-Leased, after having collected only 18.2% on the due date. Unsurprisingly, retail landlords have been hit the hardest, having so far received just 60% of rents due for the June quarter, compared to 75% and 76% respectively for the industrial and office sectors.

Despite the recent frenetic efforts of the British government to undo the WFH revolution it set in motion, the UK has significantly lagged behind mainland Europe in getting workers back behind their desks. This week, the government reversed policy once again, as covid cases began surging, urging all “office workers who can work effectively from home” to do so “over the winter,” .

This is going to have a dire impact not only on the owners of office buildings but also on the shops, restaurants, bars, cafes and other struggling city-center retail and leisure businesses that depend on the custom of office workers. Many leisure and hospitality businesses are already reeling from the government’s imposition this week of a 10 o’clock curfew for bars and restaurants. The owners of these properties are also feeling the pinch.

Shaftesbury, a real estate investment trust (REIT) that mainly rents to independent retailers in London’s West End, reported on Friday that for the six months to September so far, it had collected just 41% of rent due. Ten percent of rents are expected to be subject to deferred collection arrangements; 23% are being waived and 26% remain outstanding. By the end of August, its vacancy rate had risen to 9.7% of estimated rental value, compared to 4.8% at the end of March.

As retail vacancy rates have risen, the balance of power has gradually shifted, from landlord to tenant. Even if evictions were allowed, in this crisis it will be very tough for landlords to find a replacement for an evicted tenant — which makes landlords somewhat more flexible in dealing with their tenants.

And many tenants aren’t paying their rents, either because they can’t or are choosing not to, in the hope of renegotiating the terms of their lease contract. Shaftesbury is letting tenants defer …