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25 APRIL 2023
Resilient financial performance in line with expectation.
Urban property revenue profit of £52.7m (2021: £99.7m) and a total return of 3.5% (2021: 5.2%) reflect solid performance in the face of challenging economic conditions. Revenue profit increases in the UK but is impacted by lower trading profits in both our North American and Diversified Property Investments businesses, while Total Return was lower as rising interest rates led to modest falls in property values.
Increased new and further investment totalling £111m (2021: £81m) in a growing portfolio of 28 Food & AgTech businesses.
Net profits of £2.1m (2021: £2.4m) across Rural Estates with net income from properties up 8%, while Grosvenor Farms’ trading performance broadly flat due to investment in future projects.
Investment in long term positive impact and growth continues.
New global carbon commitment will see all Grosvenor businesses reduce direct and indirect emissions to deliver, at a minimum, a science-based target reduction1 in line with limiting global warming to 1.5°C.
Building on a 24% reduction in its emissions over two years, our UK property business already has a verified science-based target to be net zero by 2040.
Diversified Property Investments business, which backs specialist investment teams globally, to double in size to c£1.5bn of equity over the next five years further enhancing sectoral diversification currently encompassing industrials, logistics, student housing, life sciences, etc.
Longstanding support for vulnerable children and young people expanded.
First social enterprise - Grosvenor Hart Homes - established to deliver affordable housing and tailored intervention programmes in support of vulnerable children and young people.
£3.3m (2021: £3m) donated to philanthropic initiatives – predominately to support the Westminster Foundation’s work to help provide structure and opportunity to vulnerable young lives.
Commenting on Grosvenor’s 2022 performance and impact Mark Preston, Chief Executive of Grosvenor, said: "Our urban property, food and agtech and rural estates activities all faced challenging economic conditions yet delivered a solid overall financial performance in line with our expectations and strong examples of environmental and social benefit.
“Our established strategy of international diversification, the enduring appeal of the quality of our properties and destinations, alongside our ability to time a slowdown in our property development pipeline with falling valuations and to adjust to new post-Covid work and consumer trends played a key part in helping to balance our property returns.
“Against this backdrop our long-term view gives us the confidence to continue to invest. In the year, we have set ambitious goals to drive carbon reduction globally; advance our international property investment strategy; and expand our longstanding support for vulnerable children and young people within our communities.
“We have set a Grosvenor-wide commitment to further reduce our direct and indirect emissions across all our businesses to deliver, at a minimum, a science-based carbon reduction in line with limiting global warming to 1.5°C. We believe that this is the right thing to do but also see it as an essential value driver which will underpin the resilience of our business.
“As part of our revised international urban property strategy, we are aiming to double the size of our Diversified Property Investments business to £1.5bn over the next five years. Its current portfolio ranges from an industrial logistics hub in Poland to student accommodation in Brazil. We’ll be looking to expand our partner network and identify opportunities to build our property portfolio across different property sectors, applying a near term focus on Europe and Asia.
“2022 also saw the creation of Grosvenor’s first social enterprise, Grosvenor Hart Homes. The initiative, strongly supported by the Duke of Westminster, aims to improve outcomes for vulnerable children, young people and their families by providing high-quality affordable and sustainable homes alongside tailored intervention services to remove barriers to employment, financial stability, health, mental health, education and wellbeing. Building on Grosvenor’s long history of social housing provision, which today sees us support almost 700 affordable homes across Mayfair and Belgravia, a portfolio larger than the c530 we let on the open market, the initiative complements our continued commitment to philanthropic activities. Last year we donated £3.3m (2021: 3m) – the majority of which in support of the Westminster Foundation’s work to help provide structure and opportunity to vulnerable young lives.
Commenting on Grosvenor’s core sectors of activity, Mark Preston added: “Within our international urban property business, revenue profit was £52.7m, compared to £99.7m in 2021. This was primarily the result of reduced trading activity in our North American and Diversified Property Investment businesses, both of which had very strong years in 2021, boosted by one-off trading profits. Total return of 3.5% (2021: 5.2%) reflects the impact of higher interest rates across key property markets, contributing to higher yields and falling property valuations, especially in the UK where our commercial values fell by 3.7% in 2022. In contrast, our investments in sectors such as residential and logistics experienced an overall increase in values.
“Beyond our commercial performance, I was delighted to see our UK property business become the first European property company to have a long-term carbon target validated by the Science Based Targets Initiative. It continues to lead the industry on sustainability – delivering, over the past two years, a 24% reduction in emissions across all scopes, and recently making significant biodiversity and social impact commitments.
“In our food & agtech business, we committed a further £111m (2021: £81m) to new and existing portfolio companies, whose combined value now total £468m (2021: £364m). Particular highlights included Ostara, a producer of a highly efficient and sustainable phosphate fertiliser and Temperpack, a manufacturer of sustainable plant-based packaging, both of which raised fresh funds to respectively invest in a new manufacturing facility and expand production capacity. AeroFarms, the commercial leader in fully controlled vertical farming opened a new facility in the US and significantly expanded in the Middle East. Oxbury, the UK’s only bank dedicated to serving British farmers and the rural economy raised new equity and from being founded in 2021 is now on track to exceed £1bn in lending by 2024 with at least 50% of the funds being used by farms to transition to more climate friendly production.
“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 750 properties, and a business producing sustainably grown British timber. Although asset values increased to £387m (2021: £345m), net profits remained flat at £2.1m (2021: £2.4m), due mainly to the development of potential projects in Grosvenor Farms.
“From a macroeconomic perspective, we expect the remainder of 2023 to be very challenging, which will continue to weigh on property values but also provide opportunities for the long-term investor. Likewise, in the food and agtech sector we expect elevated economic uncertainty and inflation risks to continue to depress company valuations for some time.
“Notwithstanding that backdrop, I am clear and confident that we will stay the course with our strategy. Property as a tangible asset, and food as a basic human need, make for defensive investment options in a low-growth, inflationary world.
“Reflecting on 2022, we emerged from the pandemic a stronger organisation, primarily as a result of the way in which we acted quickly to support communities, which has helped to strengthen our internal and external relationships. Doing the right thing in hard times underpins the foundations for long-term success and is true to our history as an organisation and to that of the Grosvenor family.”
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 & 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 shares a common purpose - to deliver lasting commercial, social and environmental benefit - addressing today’s needs while taking responsibility for those of future generations.
Group Communications Director
+44 (0) 7736 383 262