Grosvenor, the privately-owned international property group, reported increased revenue profits in 2012, up by 8.2% to £87.4m, reflecting lower costs and higher income. Total return, which includes the impact of property revaluations, was 7.2% in 2012, compared with 9.0% the previous year.
Pre-tax profit, which includes changes in property values, rose from £315.0m to £354.4m. The biggest contributor to higher profits was Grosvenor Britain & Ireland, reflecting the strong property market in central London as well as improved operational performance and value added from active management.
Mark Preston, Chief Executive of Grosvenor, said: “This is another year of strong performance from Grosvenor with our London portfolio again contributing significantly. Looking ahead, our confidence in the future of the cities in which we are active around the world is reflected in a further rise in the value of our international development pipeline, from £3.0bn to £3.4bn.”
Within revenue profit, which excludes changes in property values, gross rents were maintained at £309.1m (2011:£309.2m). Overheads were lower for the third successive year, down by 2.8% to £117.1m (2011: £120.5m), reflecting the continued focus on managing costs across the Group. Fees from fund management and development activity and other income increased 4.0% to £57.0m (2011: £54.8m).
Shareholders’ funds increased 7.8% to £3.08bn (2011: £2.85bn) and now stand at their highest ever level. Total assets under management were slightly down at £12.2bn (2011: £12.5bn) but within that Grosvenor’s share of property assets was stable at £5.8bn (2011: £5.8bn).
Operating Company and indirect investment highlights
Grosvenor Britain & Ireland
Grosvenor Britain & Ireland (GBI) was the strongest performer in the Group, increasing revenue profit by 132% to £38.1m (2011: £16.4m). This reflected buoyant demand in the London West End market as well as improved operational performance largely resulting from the ‘Fast Forward’ operational review. Active management of the portfolio contributed 2.5% to total return which, including the benefit of strong growth in central London property prices, was 13.8% in 2012 compared with 16.2% the previous year. Total assets under management were up to £4.8bn (2011: £4.2bn). On the development side, GBI has plans to improve the area around Brown Hart Gardens in North Mayfair, which includes an hotel and further public realm works. GBI manages a portfolio within and outside London, including its London estate; the latter comprises 300 acres of Mayfair and Belgravia - over 1,500 retail, residential and commercial properties.
Grosvenor Americas (GA) increased its revenue profit to C$21.5m (2011: C$20.3m) and total return was 9.5%, (2011: 8.9%). Assets under management were C$2.2bn at the year end compared to C$2.0bn the previous year. GA continues to develop and invest in multi–family housing and its unprecedented pipeline of development projects, worth C$1.3bn, includes projects at various stages. Financed in part by proceeds from asset sales completed at the beginning of the downturn, GA has allocated16.5% of its capital to this expanding pipeline with the aim of creating vibrant urban destinations. In 2012, it started on site in North Vancouver at 15 West and 1645 Pacific Avenue in San Francisco. GA’s second Drake apartment building in Calgary, which capitalises on a design and marketing model, has proved popular with young buyers in this buoyant economy.
Grosvenor Asia Pacific
Grosvenor Asia Pacific’s (GAP) total return increased to 8.7% (2011: 8.0%), but revenue profit was down at HK$120.5m (2011:HK$154.8m ) due to lower trading profits. Assets under management increased at the year end to HK$8.5bn (2011:HK$7.6bn). One of the most significant events of the year was the expansion of its programme of residential developments with the acquisition of Monterey Court at Jardine’s Lookout in Hong Kong. Committing proprietary capital to GAP’s first office asset in Beijing was also a key strategic milestone. The residential development pipeline in Hong Kong and Japan now stands at HK$820m. GAP plans to increase its development ratio towards 13% in 2016 from the current level of 9.2%.
In the indirect proprietary investments portfolio, revenue profit declined to £49m (2011:£59.1m), due to a loss on the partial sale of the Omega office park in Spain. Sonae Sierra continued to perform well operationally in difficult markets, although provisions made against development projects reduced profits in 2012. The return from the indirect investments portfolio fell to 1.5% (2011: 3.0%).This comprised 1.0% (2011: 3.0%), from co-investments in Grosvenor Fund Management funds; 0.5% (2011: 2.9%) from Sonae Sierra, reflecting a blend of negative revaluations in Continental Europe, offset by positive revaluations in Brazil; and 1.5% (2011: 3.0%), from Grosvenor’s other assets in Australia, France and Spain.
Grosvenor Fund Management
In 2012, Grosvenor Fund Management (GFM) acquired a 30 property portfolio in Lyon, France; launched a joint venture in China with Harvest Fund Management, established a global real estate equity vehicle, opened an office in Stockholm and grew its US team. GFM recorded a loss of £10.3m (2011: £1.6m loss), due to continued planned investment in the business and reduced assets under management reflecting sales of assets as a number of funds approached the end of their life cycles, and we expect this to continue in 2013.
A copy of Grosvenor’s Annual Report and Accounts is available at www.grosvenor.com. The Group publishes an Environment Review, also available at www.grosvenor.com.
For more information contact:
Naomi Curtis/Sorrel Basher, Press Office
020 7312 6479/6101
Notes to Editors
Grosvenor Group Limited (Grosvenor) is a privately-owned property group with offices in 19 of the world's most dynamic cities. We have regional investment & development businesses in Britain & Ireland, the Americas and Asia Pacific. Our international fund management business operates across all these markets and also Continental Europe. We also have indirect investments, managed centrally.
The Board of Directors comprises seven Non-Executive Directors (Lesley Knox, Chairman; Rod Kent, Michael McLintock, Alasdair Morrison, Jeremy Newsum, Domenico Siniscalco and Owen Thomas) and two Executive Directors (Mark Preston and Nick Scarles, Group CEO and Group FD respectively). Biographies are available at www.grosvenor.com.
Rod Kent retires from the Board in June 2013, Owen Thomas steps down on 31 March 2013 as a consequence of an executive appointment; Jeffrey Weingarten, presently GFM’s CEO, joins the Board in September 2013.