We designed our ship to sail through rough water. The test is certainly upon us in 2008 with the US sub-prime crisis and its dramatic impact on global credit markets. We think the related effects will endure for at least the whole of 2008 but we are confident that our diverse business and long-term approach can thrive in these conditions.
Our returns in 2007 were good given the cyclical downturn and worsening economic conditions, as we achieved a total return of 14.4%, significantly above our cost of capital. We expect lower returns in 2008 as the effect of the turmoil in financial markets continues to move eastwards around the world and central London residential prices move down. We have capital to invest in new projects as soon as we believe prices reflect more realistic future returns. We think equity investors will return to the fore and there will be more interest in domestic markets where risk premiums will be more realistic. We are particularly keen to reinforce our activity in the USA and to continue our growth in China and Japan.
The Board will change during 2008. At the end of the year, Bill Abelmann retires as CEO of Grosvenor Americas. Bill has worked for Grosvenor for over 30 years, becoming CEO of Grosvenor Americas in 2002. He is the very definition of professionalism and readily shares with others the wisdom gained from his long experience. He will be succeeded by Andrew Bibby.
In November, Tony Wyand retires both as a Group Board member and as Chairman of Grosvenor Continental Europe. Tony has been the source of much trenchant advice since 2000 and we will miss his insights and cogent arguments. His willingness to provoke debate has made him the ideal Non- Executive Director.
The most significant change occurs at the end of June, when Jeremy Newsum will resign as Group Chief Executive, having fulfilled this role for almost 20 years. While continuing as a Non-Executive Director, he will hand over all executive duties to Mark Preston. Jeremy’s vision and influence have accelerated the growth of the business and broadened our reputation. He has maintained the high standards of leadership established by his predecessors. I have every confidence that Mark will emulate him and lead the Group to further success in the next 20 years.
The Earl of Home
13 March 2008
"We achieved a total return of 14.4%, significantly above our cost of capital"
© Grosvenor 2008