Grosvenor Group’s focus on communities, 2019 results and future plans


Grosvenor Group focused on supporting local communities to cope with Coronavirus and ready to take forward ambitious growth plans

  • Currently dedicated to supporting tenants, customers, partners and communities cope with impact of Coronavirus

  • 2019 financial results, announced today, in line with expectations following deliberate decision to accelerate UK asset sales pre 2016 and reduce international development pipeline, anticipating low point in the property cycle

  • Revenue profit of £65.9m (2018: £131.0m) and total return of 2.6% (2018: 5.5%)

  • Considerable liquidity to weather the impact of Coronavirus and underpin ambitious growth plans for all operating companie

  • Group’s commitment to international diversification continue

  • Now more than ever, Grosvenor will continue to optimise the delivery of social as well as commercial benefit - a recently announced priority being our group-wide commitment to achieving global net zero carbon across our entire property portfolio.

Grosvenor Group Limited (“Grosvenor Group”), the privately-owned international property group, is presently focused on supporting its tenants, customers, partners and communities cope with the impact of Coronavirus while aiming to advance a new phase of ambitious growth thereafter.

Mark Preston, Chief Executive of Grosvenor Group, said:

“Over the last several weeks, with the full support and encouragement of the Duke of Westminster, the Grosvenor family and the Grosvenor Estate Trustees, all parts of the Grosvenor Estate and especially its largest, Grosvenor Group, have acted quickly to help our tenants, customers, partners, communities and of course our people, deal with the impact of Coronavirus.”

“We have offered practical and financial support to help businesses and individuals overcome the present situation”.

Initiatives have included:

  • Offering rent deferrals and rent-free arrangements to independent and vulnerable retail tenants and other commercial businesses;
  • Contributing £2.6m to the Westminster Foundation, which represents the charitable activity of the Duke of Westminster and Grosvenor Estate, along with £1.3m of other charitable donations. Together with a personal donation of £10m from the Duke of Westminster to the Foundation, it has made £12.5m available to support vulnerable groups and key workers affected by Coronavirus;
  • Waiving the forthcoming rent for our 26 charities within our London estate portfolio, which is already heavily discounted;
  • Helping suppliers with cashflow by paying them promptly and in advance;
  • Making a number of our properties in Mayfair and Belgravia available to key workers and offering vacant properties and spaces to local Councils to help with their relief efforts.

Mark Preston, added:

“As we continue to review the support we are providing on an ongoing basis, adapting our response as needed to ensure we continue to do all we can to help our communities, we are also ready to advance our ambitious business plans to deliver long term growth and social benefit”.

Commenting on the Group’s 2019 performance and the business’ future plans, Mark Preston, said:

“In the current climate, our 2019 results are very obviously yesterday’s news”.

“Following a decade of strong property returns, they are modest by our recent standards, but in line with our expectations. They are the inevitable consequence of timing several asset sales and reducing our development pipeline to avoid deiveries of new property at a time we anticipated would coincide with weaker market conditions.

“Our very strong financial position enables us to support our communities at this critical time, but also provides us with the capital to take forward our future plans. Our financial capacity will help to finance a £4.9bn development pipeline designed to generate long-term growth while ensuring that the improvement of property and places goes hand in hand with the delivery of lasting social benefit.

“We look to the 2020s with ambitious plans to pursue our diversification objective, with 50% of our assets now outside the UK.

“In China, construction is underway on our strategic joint venture for a 99,000 sq. m. site in Nanjing which is set to create a mixed-use development of 167 residences, serviced apartments and a hotel.  And in London’s Bermondsey work will start soon on the building of over 1,500 rental homes and a secondary school, which will improve the fabric of this part of the city, delivering much-needed rental housing and creating a new investment for long-term hold.

“It is clear that the economic impact of Coronavirus already constitutes a severe shock in 2020 and we are adopting a very cautious stance on new commitments for the time being. But we remain positive about the longer term prospects for our planned projects in San Francisco, Washington D.C., Vancouver, London, Shanghai, and other investment activity in the U.K., France, Spain, Brazil and Australia.

“In realising these investments, we will continue, now more than ever, to optimise the delivery of both commercial and social benefit - a key priority being the delivery of our net-zero carbon targets* by 2030 and 2050”.

Summary financials:

 

Revenue profit

Total return

Assets under management

Property assets

Shareholders’ funds

 

Economic gearing
(economic borrowings divided by equity capital)

 

Development exposure
(the level of committed development activity as a proportion of total property exposures and commitment)

2019

£65.9m

2.6%

£11.9bn

£7.1bn

£5.1bn

20.9%

11.9%

2018

£131.0m

5.5%

£12.3bn

£7.0bn

£5.0bn

20.4%

12.5%

2017

£143.5m

2.7%

£12.6bn

£6.8bn

£4.9bn

23.8%

14.4%

 

Operational highlights from 2019 include:

Grosvenor Britain & Ireland

For the UK at large, 2019 was a challenging year dominated by an uncertain political backdrop which held back economic growth. In the property markets, this uncertainty was most evident in the retail sector, which faced particular pressure, and through lower volumes of investment than usual. In this context, Grosvenor Britain & Ireland performed strongly. We delivered full year revenue profits of £41.1m (2018: £39.2m), ahead of budget. Total return was 3.1% (2018: 3.2%) reflecting positive valuation movements, above expectations.

Leasing activity across our London estate remained strong although transactions were often protracted. Our occupancy rates stood at 93.6%. We signed 80 new retail and office tenants to our estate and achieved 81% net customer satisfaction rating.

Our plans to invest £1bn in commercial property and new public spaces to improve the West End’s appeal continue. We hope to secure planning consent in 2020 in respect of our plans to redevelop a part of London’s Belgravia around Cundy Street. Our ambition is to increase the amount and the quality of housing in this neighbourhood, as well as making it greener and more sustainable.

Having recently secured planning consent to regenerate the Biscuit Factory site in London’s Bermondsey, we are looking forward to beginning its development anchored by over 1,500 homes for rent, including 35% affordable, alongside three acres of public and play space, and a new secondary school facility.

Grosvenor Americas

Grosvenor Americas had another highly active year. In 2019, our activities were focused on near-term defensive positioning and longer-term planning. As anticipated, reduced trading activity resulted in lower revenue profits of £22.8m (2018: £39.0m). Positive revaluation gains contributed to a total return of 7.0% (2018: 5.7%).

We sold value-add investment properties in San Jose, CA, and Washington, D.C. and ended the year with our investment portfolio over 97% leased with robust valuation growth.  We also cleared key development milestones; breaking condominium sales price records in San Francisco, CA, welcoming homeowners in Vancouver, BC, receiving planning approval for apartment projects in Berkeley, CA, and Washington, D.C.; and advancing large multi-year projects in Metro Vancouver and San Francisco, CA.

Over the next several years, our Development team will continue to contribute much-needed housing, but at an even larger scale, as we advance major master-planned developments in San Francisco, CA, and Vancouver, BC. Our Investment team will bring their value-adding skills to newly-acquired urban properties, growing our portfolio. Our Structured Development Finance team will continue to facilitate the production of new housing in partnership with best-in-class developer partners.

Grosvenor Europe

Pricing remained competitive in all of Grosvenor Europe’s markets in 2019.  Despite these challenges, we grew our income-producing office portfolio in both Paris and Madrid and are examining the potential to enhance the sustainability credentials of these assets, with the aim of achieving our first net zero carbon building in 2020.

Financially, we delivered a revenue loss of £(0.9)m (2018: £11.6m profit) which we expect to improve when the full benefit of our office acquisitions in Paris and Madrid, made towards the end of this year, will be realised. Total return of (0.8)% (2018: 3.3%) reflected revaluation losses in relation to our retail assets, which were impacted by market sentiment.

In Madrid, we completed our first residential development scheme, Jorge Juan 53, while off-plan sales progressed well across the rest of the portfolio.

In Sweden we are repositioning several assets by repurposing underused retail space into leisure, service and community uses, including introducing healthcare, education and fitness facilities.

Meanwhile in Paris we invested in an eight-storey 1,800 sq m redevelopment project and a 3,300 sq mixed-use property in the Pantin neighbourhood, a booming area popular with businesses due to various urban regeneration projects.

Grosvenor Asia Pacific

Our 2019 performance in Asia was mixed following exceptional results in 2018. The macro backdrop was challenging. US-China trade tensions combined with the economic transition already in motion in China created economic uncertainty across the Asia region. Most significantly, political crisis and social unrest dominated in Hong Kong where we have significant investment exposure. The Japan market proved more resilient, and investor demand for quality assets across the region remained strong. Leasing and sales activity was moderately positive across the rest of our portfolio, and valuation gains were better than expected for almost all our assets.

As a result, Grosvenor Asia Pacific generated £2.3m revenue profits (2018: £26.9m). Total return of 3.8% (2018: 6.6%) reflected modest revaluations and disposal profits including those realised from the sale of part of our interest in Grosvenor Place Kamizono-cho, a luxury residential investment in Japan.

At the end of the year we exchanged contracts on the acquisitions of what will be our second retail asset in Ginza, Tokyo. This investment calls for the development of a vertical retail building and will be our first proprietary development project in Japan. During the year, we brought in ReBITA – a local Japanese property investor – as a strategic investor in Grosvenor Place Kamizono-cho. Construction progressed well at DAYU VILLA, our residential joint venture development in Nanjing, China, with residential pre-sales launching well at the end of the year.

Indirect Investment

2019 was a successful year for our Indirect Investment team. We committed to the delivery of student accommodation in Brazil, expanded our investment programmes in both Australian healthcare and the US affordable housing sectors and achieved successful planned exits from three of our partnerships in the office and industrial/logistics sectors.

In terms of financial performance, 2019 reflected the full year impact of our reduced interest in Sonae Sierra (from 50% to 30%), with revenue profits of £25.5m (2018: £33.6m). This was also impacted by the sale of income-producing assets in early 2019. Lower revaluation gains in Sonae Sierra and our third-party managed assets resulted in a total return of 5.1% (2018: 9.1%) being delivered.

Our current portfolio of 12 investments, including our 30% shareholding in Sonae Sierra,gives us access to assets and expertise in five continents, 13 countries and seven different property sectors.

ENDS

Notes to Editors


About Grosvenor Group:

Grosvenor Group is a privately-owned international property company.

With a track record of over 340 years, we develop, manage and invest with a purpose of improving property and places to deliver lasting commercial and social benefit.

This is achieved by adopting a farsighted perspective, by being locally engaged and sharing and benefitting from our international experience – we call this our Living Cities approach.

Through the activities of Grosvenor Britain & Ireland, Grosvenor Americas, Grosvenor Asia Pacific and Grosvenor Europe we diversify the Group’s property portfolio by geography, sector, activity, currency and management teams. Our Indirect Investment business further diversifies the Group’s property interests by backing specialist third-party management teams. It invests Grosvenor’s capital in Africa, Australia, Europe and North and South America.

To read more about Living Cities please click here

www.grosvenor.com

*See our Net Zero carbon commitment here
 

Follow us on:
Twitter: @Grosvenor_Group
Linkedin: Grosvenor Group

Group 10 Group 2 Search button Drop down arrow Group 2 Group 3