Grosvenor, the privately-owned international property group, doubled revenue profit (which excludes the impact of property revaluations) in 2013 from £84.5m (restated) to £175.1m reflecting a high level of trading profit in London, taking advantage of favourable pricing and increasing its capacity to undertake a growing pipeline of development opportunities. Total return (which includes the impact of property revaluations) was 9.7% compared with 7.2% the previous year.
Group pre-tax profit rose from £367.8m (restated) to £506.9m. Grosvenor Britain & Ireland enjoyed sharply higher revenue profits from its residential business and further operational improvements. There were also strong performances in Grosvenor Americas and the indirect investments portfolio.
Mark Preston, Chief Executive of Grosvenor, said: “We’ve had an excellent year: we doubled revenue profit, chiefly through timely disposals in London which took advantage of favourable conditions, and we delivered a strong total return of 9.7% - ahead of our long term average.
“Reflecting the confidence we have in those cities we consider to have particularly good prospects, we have restocked our pipeline of developments, which has increased from £3.4bn to £6.0bn, which positions us well through to 2020.”
Shareholders’ funds increased to a record £3.5bn from £3.2bn (restated) during the year. Grosvenor’s share of property assets was unchanged at £5.8bn.
Grosvenor improved its environmental performance in 2013 for the fourth consecutive year. Like-for-like carbon emissions were 1.3% lower and Grosvenor’s water consumption fell by 3%.
Grosvenor’s Annual Review, Financial Statements, Environmental Data and index of sustainability reporting under the Global Reporting Initiative are all available on our performance pages.
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Notes to Editors
Grosvenor Group Limited (Grosvenor) is a privately-owned property group with offices in 17 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, with a particular focus in Europe. We also have indirect investments, managed centrally within the Holding Company. The Board of Directors comprises five Non-Executive Directors (Lesley Knox, Chairman; Michael McLintock, Jeremy Newsum, Domenico Siniscalco and Jeffrey Weingarten) and two Executive Directors (Mark Preston and Nick Scarles, Group CEO and Group FD respectively). Biographies are available here.
Operating Company and indirect investment highlights
Grosvenor Britain & Ireland
Grosvenor Britain & Ireland (GBI) was the strongest performer in the Group, increasing revenue profit more than threefold to £117.5m (2012 restated: £35.2m). This reflected GBI’s decision to take profits by selling down positions in central London residential trading projects, where the market has been very strong. Further improvements in operational performance due to active management of the London estate also contributed towards strong results.
GBI remains confident about its core London estate but has reduced its exposure to super-prime central London development and is focusing current investment on diversifying into the domestic mid-market rental sector in London. The amount of GBI capital allocated to its Grosvenor Developments arm for ‘off-estate’ activity has been increased from 10% to 20%. GBI’s total return was 16.5% (2012: 13.8%).
Grosvenor Americas (GA) increased its revenue profit by 78% to C$38.3m (2012: C$21.5m) and total return was 10.5%, (2012: 9.5%). Assets under management were C$2.6bn at the year end compared to C$2.2bn a year earlier. GA recycled capital in 2013 through a number of significant disposals and acquisitions. There were three disposals, including the sale of 830 North Michigan Avenue on Chicago’s ‘Magnificent Mile’ acquired 20 years ago, and key acquisitions included rental apartments in the San Francisco bay area and office buildings in the suburbs of Seattle. GA received approval to develop a rarely available site in Ambleside in West Vancouver. With markets in North America all now benefitting from sustained economic growth, Grosvenor Group has allocated an additional C$50m of capital which will be invested in development and the mezzanine lending programme.
Grosvenor Asia Pacific
Grosvenor Asia Pacific’s (GAP) revenue profit was lower at HK$54.8m (2012: HK$120.5m) due to lower trading profits reflecting the completion of sales at The Westminster Terrace in Hong Kong in 2012. Total return also fell, to 5.4% (2012: 8.7%), as the acquisitions made in 2013 contributed to only six months of revenue and a gap in trading profits. However, assets under management increased significantly to HK$10.8bn at the year end (2012: HK$8.5bn) as GAP positions itself for the long-term, increasing its presence in Asia with a number of new acquisitions, including offices in Shanghai and Beijing and a residential building in Tokyo. 2014, which marks Grosvenor’s 20th anniversary operating in the Asia Pacific region, will see the launch of a new residential development partnership in Japan which will bring a number of new projects into the pipeline.
In the indirect proprietary investments portfolio, which represents 30% of the Group’s capital (2012: 36%), revenue profit increased by 24% to £60.9m (2012: £49.0m) mainly due to trading activity at Sonae Sierra and total return increased to 3.6% (2012: 1.5%). A total of £250m was raised from the sale of assets in Australia, Spain and France and a portion of this will be reinvested in other geographies and specialist sectors over 2014-2016. In March Grosvenor announced an investment in Australia, through a Propertylink industrial property vehicle; other priorities are Sub-Saharan Africa (retail bias) and Continental Europe (industrial and logistics bias). Co-investment in Grosvenor Fund Management investment vehicles reduced slightly to £250m (2012: £286m), reflecting sales as funds approached planned end dates. This included the closure of the Grosvenor Shopping Centre Fund with the return of £25m capital to Grosvenor. The investment in Sonae Sierra was largely unchanged at £340m at year-end.
Grosvenor Fund Management
Grosvenor Fund Management (GFM) saw net revenues from management fees drop to £17.7m (2012: £23.9m). Following a strategic review, GFM has decided to focus new investment on urban mixed-use property in Europe while continuing to serve an international investor base. A significant acquisition in 2013 was Fleet Place House in the City of London for the Grosvenor London Office Fund. In November GFM began marketing its Global Real Estate Absolute Return Fund to investors, after a year of managing the fund on behalf of Grosvenor Group. The fund offers investors a liquid, low-volatility route to obtaining real estate returns.
For further information and a glossary of key terms, please refer to the Grosvenor Annual Review 2013, Annual Financial Statements 2013, Annual Environmental Data 2013 and the Global Reporting Initiative Index available on our performance pages.