Commenting on Grosvenor’s 2023 performance and impact Mark Preston, Chief Executive of Grosvenor, said:

“With a short-term lens, 2023 will go down as a challenging year of high interest rates, dampened investor confidence, and downward pressures on valuations. Our financial results reflect these challenges but are a resilient expression of the continued appeal and underlying revenue strength of our properties, and also reflect reduced trading profits given we deliberately slowed our development pipeline in anticipation of worsening economic times. 

“With a longer-term lens, however, I look at 2023 as a year of significant progress in the delivery of lasting benefits, in terms of sustainable growth, the wellbeing of the communities we are part of, and, in respect of our approach to environmental sustainability.”

Resilient financial performance relative to our markets    

• International urban property business delivers revenue profit of £41.5m (2022: £52.7m) and a total return of -0.2% (2022: 3.5%), a resilient result relative to international real estate markets facing challenging economic conditions. Before the impact of foreign exchange, Grosvenor’s property return was 0.8% compared to 1.9% in 2022.
  
  
• Property asset values more resilient than expected, with the overall moderate value decrease of 2.7% being more than offset by the combination of recurring revenues and disposal profits.
  
  
• Average (global) occupancy of 95% demonstrates enduring appeal and strength of our portfolio to occupiers. Strong demand was particularly notable in Canada (100% occupancy) and for offices with high sustainability credentials. Grosvenor’s landmark developments in the UK, such as 65 Davies Street above the Bond Street Elizabeth line, Holbein Gardens near Sloane Square, and the Ice Factory in Belgravia were all fully pre-let ahead of completion.
  
  
• Investment confidence gathers pace with Grosvenor completing its first-ever investment in India and construction beginning at South Molton, a new mixed-use low-carbon development – the West End’s largest - in London’s Mayfair. Grosvenor’s UK property business is also expanding its residential debt business, building on the success of a recent £120m residential debt funding partnership.
  
  
• Food & AgTech business committed follow-on investments of £27m (2022: £66m), with a total portfolio value of £391m (2022: £468m) following two disposals and two revaluations.
  
  
• Net profits of £3m (2022: £2.1m) across Rural Estates buoyed by improved profitability in farming.

Dedicated plans, measures, and resources now in place to deliver, at a minimum, a science-based target reduction in emissions in line with limiting global warming to 1.5°C across international activities. The commitment is acting as a catalyst behind an acceleration in decarbonisation and nature enhancement action. 

• Action on climate crisis through property retrofits, net zero developments, and working with our supply chain. UK property business, the largest within the group, reaches milestone of retrofitting 1 million sq. ft. of space across its London estate and further reduces its emissions from almost a quarter (24%) over two years to almost a third (32%) over three years, progressing towards a verified science-based target to be net zero by 2040.
  
  
• Action on nature crisis sees Grosvenor redouble efforts to build on a longstanding track record of protecting, restoring, and enhancing nature through rural initiatives to improve soil health, water quality, plant hedgerows and trees, restore peatlands and other unique habitats such as ponds, floodplains, and upland meadows. It is developing a landscape-scale, ecosystem-wide river catchment conservation project in Scotland and is involved in flood management intervention across several river systems. Within cities, Grosvenor is creating a biodiversity net gain with urban parks and rooftop gardens.
  
  
• Continued investment and activity to scale new solutions that can help reduce the carbon-intensive practices that are ubiquitous within farming and food production.
  
  
• Further investment in renewable energy is being explored.
  

Community investment and focused support on vulnerable children and young people a key priority

• Grosvenor’s first social enterprise - Grosvenor Hart Homes – begins partnership with Cheshire West & Chester Council to deliver its first affordable homes paired with tailored support services for vulnerable children, young people and families in Chester City Centre.  
  
  
• £3.3m (2022: £3.3m) donated to philanthropic initiatives – predominantly in support of the Westminster Foundation’s work to fund initiatives focused on vulnerable young people through mental health programmes, youth hubs, education, sport, and on mitigating the effects of the cost-of-living crisis.
  
  
• Significant community benefits delivered across the communities where Grosvenor is active, including realising a £1m funding target two years ahead of schedule for our Greener Futures programme, enabling community-led climate action across 38 community projects in Westminster, benefiting c35,000 people. 

Discussing some of Grosvenor’s 2023 highlights, Mark Preston said:

“The global commitment we made last year to decarbonise our activities in line with the 1.5°C target has acted as a catalyst for action: not only are we on a clear path to accelerate our decarbonisation activities, but climate risk and resilience are now embedded within our decision-making. In turn, this is spurring us to develop a more circular business model, driven by our ability to reduce our environmental impact, including through the reduction of waste at source, and by a desire to have a net positive effect on the planet. 

“The range of our activities and our long-term approach means we can contribute to both the climate and nature crises, affecting change in both urban and rural environments, and, through our investments, realise synergies and bring benefits to both communities”.

“The strength and quality of our property portfolio continues to be demonstrated by its enduring appeal to occupiers globally. Although our development activities had been scaled down in anticipation of tougher times, we have progressed a healthy pipeline of projects in the UK and North America. In the UK, our joint venture with Mitsui Fudosan has moved to the construction phase on the South Molton development, a new low-carbon, mixed-use scheme that ranks as the largest in London’s West End. In North America, we are advancing plans for 250+ rental homes in Washington D.C. and have completed and submitted a development permit for Phase 1 of Mayfair West – a mixed-use masterplan that involves one of Vancouver’s largest undeveloped sites with the ultimate aim to turn 14 acres into a new 1.5 million sq. ft. mixed-use community comprising 17 buildings, over 1,600 homes catering to various income levels, and numerous facilities, including a two-acre public park.

“Our newly created social enterprise, Grosvenor Hart Homes, began a partnership with Cheshire West & Chester Council, delivering its first affordable homes with tailored support services for vulnerable, young people. We plan on scaling up the enterprise to deliver more than 750 homes to improve outcomes for 2,000+ children and young people over the next 10 years.” 

Commenting on Grosvenor’s core sectors of activity, Mark Preston added:

“Within our international urban property business, UK property proved the biggest contributor to revenue profit. Strong tenant demand for real estate with high sustainability credentials, coupled with the appeal and amenities our locations offer led to strong rental performance.

“Across North America, trading activity proved more challenging with high-interest rates negatively impacting revaluations – the Downtown San Francisco retail market in particular seeing average property prices lower than 10 years ago. Despite this, our occupancy rates last year were very strong at over 95% in the US and 100% in Canada. Significant progress was made on several developments across our cities including 163 rental homes in Berkeley, California, 260 rental apartments, and a 6,000 sq. ft. public park in the Union Market neighbourhood of Washington, D.C.

“Meanwhile, our diversified property investments business, which co-invests with like-minded partners in third-party managed joint ventures, added two new partners to a portfolio that includes industrial and logistics in Poland, the US, and Australia, student housing in the US and Brazil, contemporary workplaces in the US and Ireland and medical facilities in the US. For the first time, we gained exposure to the Indian market through a fund investment focused on logistics. Over the past year, we adopted a more prudent investment stance, and this now leaves us with sufficient financial capacity and the continued ambition to significantly grow and diversify our international property investment activity as markets adjust and recover.

“Grosvenor Food & AgTech is an established investor in companies that are reshaping the food and agtech sector to make food production more economically and environmentally sustainable as well as better for human health. During the past year, investor-backed food and agtech businesses faced a hostile funding environment and downward pressure on company valuations. We retained a healthy level of capital reserves, making no new investments, while committing £27.0m of new capital (2022: £111.0) to existing portfolio companies to assist them in growing revenue, improving profit margins, and, where necessary, raising additional funding from others.

“Within our portfolio, many of our companies have made good commercial and financial progress. Vytelle, an industry leader in cattle genetics whose technology helps reproduce the best of beef and dairy cattle to improve yields and the environment, completed a Series B fundraise, enabling it to expand its worldwide operations. Oxbury, the leading UK agricultural bank helping British farmers manage their finances more efficiently and effectively and become more productive and sustainable, continued to attract investment and was recently granted a £100m loan guarantee, increasing its lending power. TemperPack, the leading producer of a plant-based, sustainable insulation alternative to polystyrene and bubblewrap, continued its healthy growth trajectory by launching its WaveKraft platform, allowing customers to produce insulation materials on-site, saving storage space, shipping costs and reducing CO2 emissions. Gousto, a recipe box company helping UK households cook high-quality fresh foods, while reducing waste, returned to profitability despite record food inflation and the cost-of-living crisis affecting its UK market.   

“Our rural estates’ commercial activities are predominantly centred around Grosvenor Farms, one of the leading sustainable dairy and arable farms in the UK; a rural portfolio of more than 800 properties; and Grosvenor TimberWorks, a business processing sustainably grown British timber. Net profits across our rural estates amounted to £3.0m (2022: £2.1m) and were generated from improved profitability within farming coupled with resilient commercial and residential property income. Asset values decreased to £385.0m (2022: £387.0m), mainly because of a property sale and the conversion of several Chester City Centre market-let properties to affordable housing.”

Looking ahead, Preston concluded:

“The global macroeconomic picture remains challenging, although with inflation reducing in many economies, there is a more balanced outlook than at this time last year. We are getting used to the idea that the broadly stable economic and political environment of the last four decades – at least for the Western world – is not likely to return for the foreseeable future, if at all. 

“For anyone under the age of 60, this is quite a dramatic realisation. And yet, when considered over a longer timeframe, it is not so remarkable. In any period in history before this recent era, the degree of uncertainty we face today would have been familiar – war, inflation, weak growth, high-interest rates, socio-economic disruption, technological change, and even migration are not new phenomena, albeit climate change and demographic change are. 

“Our approach at Grosvenor in addressing these difficulties is to remain true to – and guided by – our purpose and values, focusing on the resilience of our businesses, encouraging innovation and adaptability, and maintaining a close eye on prudent financial measures and ratios.

Grosvenor’s purpose is to deliver lasting commercial, social, and environmental benefit. We strive to take everyday business decisions with an eye to the long term. And we believe business can thrive by adopting a mindset that values sustainable growth benefitting both people and the planet. We work to ensure that our activities help address the urgent needs of today while taking responsibility for those of future generations.”

Read more in our Annual Review

About Grosvenor
 
Grosvenor is an international organisation whose activities span urban property, food and agtech, rural estate management and support for philanthropic initiatives. 

We develop, manage and invest to improve property and places across many of the world’s leading cities. In the food and  agtech sector our growing investment portfolio includes some of the industry’s most innovative businesses working towards a better food system. We manage rural estates and their environmentally sensitive habitats, while supporting charitable initiatives targeted at vulnerable young people. 

We are a values-led organisation which represents the Grosvenor family and share a common purpose – to deliver lasting commercial, social and environmental benefit – addressing today’s needs while taking responsibility for those of future generations. 

www.grosvenor.com
 
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