Grosvenor Fund Management
Grosvenor Fund Management was established as a single international business three years ago, to provide investors with a unified approach to fund management around the world.
Our strategy remains to offer investors a range of regional property sector funds, in markets where Grosvenor has local expertise, that deliver attractive risk-adjusted returns.
The credit crunch is creating challenging conditions with significantly tighter lending. As a result investors are reassessing risk premiums, with lower investment volumes creating opacity in markets. Prices have already adjusted rapidly in the UK and are under pressure in North America and Continental Europe. Asias strong economic growth and investor demand has, to date, ensured markets there remain immune to the current downturn.
10 Grosvenor Street
Type Fund
Country England
City London
Sector Office
Ownership 50% Grosvenor London Office Fund/ 50% Hammerson
Area 6,200m2
"This Mayfair office building, developed jointly by Grosvenor and Hammerson and part sold to the London Office Fund in 2007, provides top-quality accommodation over seven floors. It was built to meet the British Council of Offices 2000 guidelines for energy efficiency and uses the latest materials and design techniques."
Stuart Beevor
Managing Director
Occupational markets are in good shape with supply and demand in equilibrium and rents growing gently, but these could weaken as 2008 unfolds. We always counsel investors to consider the long-term qualities of property and, for those with patience, we believe the current market represents a return to more orderly conditions and will present attractive buying opportunities.
Fund activity
Our global expansion continued in 2007 with funds under management increasing to £3.1bn. We also continue to build our investor relationships and currently have 66 investors in 20 funds and separate investor accounts.
Strong investor appetite for Asia facilitated the successful launch of our third Japanese fund, the Grosvenor Office Retail Fund, with total capital of JPY100bn (£450m). We also raised a further 175m (£129m) equity for our Grosvenor French Retail Investments fund. Having consulted the market we decided to re-assess the strategy of our Australian office fund; we are considering the potential for its relaunch.
Investment activity
Our investment activity remained robust throughout 2007, approaching £900m across all regions. In Asia, the Japanese Grosvenor Office Retail Fund made nine acquisitions totalling JPY16.6bn (£75m) in the latter part of 2007.
In Continental Europe we acquired over 132m (£97m) of property and in the UK one of our flagship funds, the Grosvenor Shopping Centre Fund, acquired a 51% stake in the Festival Place Shopping Centre in Basingstoke for £141m. In the USA, we completed a number of significant transactions, including $910m (£457m) of acquisitions. Selling to realise profits is an important discipline and one of the highlights was the disposal of a portfolio of 15 care homes in the USA, for $268m (£135m), which had been acquired in 2004.
The year ahead
2008 promises to be a busy year for new fund launches. Continuing to satisfy the tremendous interest in Asia, we aim to close our first fund in China, the Grosvenor Vega China Retail Fund. It will invest a target of US$500m (£251m) in retail malls and mixed-use projects. On the other side of the world, we aim to launch the Grosvenor New York Multi-Family Fund.
Joule A Building
Type Fund
Country Japan
City Tokyo
Sector Mixed-use
Ownership Grosvenor Office Retail Fund
Area 9,771m2
This mixed-use building in central Tokyo was purchased by the Grosvenor Office Retail Fund in December 2007. Grosvenor is enhancing the JPY8.7bn (£39m) asset by making a further investment to remove asbestos, in accordance with Japanese building codes.
In the UK our focus is to position our three flagship funds Grosvenor London Office Fund, Grosvenor Residential Investment Fund and Grosvenor Shopping Centre Fund to take advantage of acquisition opportunities that are likely to arise due to evolving market conditions. We have also been setting up the management structure of Liverpool One as we prepare to assume full management responsibility upon completion this year.
In Continental Europe, we plan to build on the track record of the Grosvenor Hexagone French Office joint venture to create a French office fund, and to maintain our market-leading position within the retail sector with the closing of the Grosvenor Italian Retail Fund.
Meeting the strategic needs of investors remains crucial to the success of our business and we continue to strive to have the best people in place to do this. Staff levels grew by 44% in 2007 to 124 in Asia alone the team more than doubled to 28 people. 2008 promises to be a challenging year due to economic and market uncertainty. We relish the opportunities that we anticipate will arise as we work with investors to continue growing our fund offerings.
Stuart Beevor
Managing Director
Funds under management
