Grosvenor Estate Holdings is a privately-owned UK real estate company. It was set up in 1979 to represent the property investment and development activities of the Grosvenor family, headed by the 6th Duke of Westminster. Although widely known for owning large amounts of property in London’s most exclusive districts, Mayfair and Belgravia, the company stresses that its portfolio is mixed, and its perspective is global.
Last month it took the unusual step of putting a chunk of its London portfolio on the market in order to raise cash for re-investment in London and continental Europe – the first time Grosvenor Estate has ever sold a London portfolio. It hopes to raise £50m through the sale of 125-year leases on the offices in Mayfair and Belgravia. Jones Lang Wootton is handling the sale.
Grosvenor International administers the group’s assets in the US, Canada and Australia. At the end of the 1996/97 financial year, 66.2% of the assets by value were held in the US, 18.3% in Canada and 15.5% in Australia. Through Grosvenor Shaw Asset Management, the group also has an investment programme in South East Asia.
Most recently, Grosvenor has expanded international operations through acquisitions in continental Europe. “Contrary to many other UK property companies, we believe strongly in the long term benefits of extending our international business and experience,” Grosvenor Estate’s chairman the Duke of Westminster comments in the company’s latest business summary. “Markets are not fully synchronised in Europe and economic cycles can be used to advantage,” he adds.
Over the past year, Grosvenor Estate took stakes in property companies in France, Spain and Portugal. So far, it has made four investments believed to total around $200m; because it is a private company, Grosvenor is not required to disclose its spending.
One is a 50% stake in European Prime Properties, established in France with Exor SA. This company has purchased three properties in Paris and three in London. Another French acquisition has been a 7.75% holding in quoted property company Societe Fonciere Lyonnais. SFL has a portfolio of residential and office property in central Paris. In early October, it became one of France’s leading property players, when it launched FFr 1.9 bn in convertible bonds and new shares, to help finance FFr 2.8 bn of prime property acquisitions in Paris. Main shareholders in SFL are the French operation of insurance company Commercial Union and UK pension fund manager Hermes.
In Portugal, Grosvenor Estate has taken a 25% share in Sonae Imobiliaria, the country’s largest shopping centre developer and manager. Parent company Sonae is Portugal’s largest private company, operating in the retail and financial service sector. For Grosvenor, the link gives the UK company a stake in Portugal’s largest retail shopping complex, the Colombo Centre in Lisbon, which opened in September this year.
In Spain, Grosvenor Estate has acquired a 5% holding in Hermanos Revilla a private company with a portfolio of prime Madrid office properties.
Grosvenor has been researching continental markets since 1988, and according to the company, the four investments made in 1996 represent the “base for the development of the group’s full range of business activities on the continent”.
In September this year, former Healey & Baker partner Neil Jones was brought in as continental director. He announced the opening of a Paris office early in 1998, where he will be based. He also revealed that two or three other offices will be set up in European cities.
On his appointment, Jones confirmed that Grosvenor is looking further afield for European investments. He mentioned Germany, Belgium and central Europe as possibilities. He also indicated that Grosvenor Estate is likely to make future European investments on a direct basis, rather than through partnerships with other companies.
While expanding on the Continent, the company is more cautious about projects in the UK. “We have been buyers of UK property for over four years and have substantially increased our development programme since 1993,” the chairman explains. “But we have some concern that the pricing in some sectors, notably shopping centres, is starting to move beyond good value. Such sharp movements as have occurred are incompatible with stable markets.”
Perhaps with this in mind, the group sold 90% of its interest in the Grosvenor Precinct shopping centre in Chester in 1996, for more than £90m. A Grosvenor trust retains the freehold and a 10% interest in the 30-year old centre. The Grafton Centre in Cambridge, in which Grosvenor had a 15% stake and Mercury Asset Management the remainder, was also recently sold.
Grosvenor Estate still has several shopping centres under development, including joint ventures in Dublin and East Kilbride. It also has office developments under way in nine UK locations, among them a new 11,152 m2 building in Old Broad St in the City of London. This is due for completion early next year.
Financial highlights 1996/97
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pre-tax profits up 13.4% on 1995 |
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6.3% increase in underlying value of investment portfolio |
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155000 m2 development underway or planned |
Grosvenor Estate Holdings
53 Davies Street
London W1Y 1FH
tel +44 71 408 0988
fax +44 71 629 9115
