Bloomberg News

Duke of Westminster’s Grosvenor Reports Record Earnings in 2011

April 17, 2012

Grosvenor Group Ltd., the property company owned by the Duke of Westminster’s family trusts, said earnings before items rose to a record last year as it increased rental income and cut expenses.

Pretax profit excluding changes in investment property values and one-time items increased to 80.8 million pounds ($128 million), the highest since the London-based company began reporting the measure of earnings in 1999. That compares with 64.2 million pounds a year earlier, Grosvenor said today on its website. Shareholders’ funds, a measure of net asset value, climbed 7.8 percent to 2.86 billion pounds.

Chief Executive Officer Mark Preston is reorganizing Grosvenor to prepare the company for an eventual recovery in global real estate markets. The group cut vacancies and costs to lift net rental income, reorganized its fund management arm and increased development projects in under-supplied markets, such as central London luxury homes and San Francisco offices.

“We are now beginning to see the benefits of the extensive reshaping of the group over the past few years,” Preston, 44, said today in an e-mailed statement accompanying the company’s annual report.

The value of real estate owned or managed by Grosvenor appreciated by 15 percent to 12.5 billion pounds, lifted by the company’s fund-management operations. Pretax profit fell to 315 million pounds from 394.8 million pounds a year earlier as values rose at a slower pace.

Grosvenor’s Britain and Ireland division more than doubled its profit to 16.4 million pounds, while earnings generated by Sonae Sierra, the shopping center venture with Portugal’s Sonae SGPS SA, rose 40 percent. The company also reported profit growth of more than 60 percent at its North American and Asia- Pacific divisions.

Fund Management Loss

Grosvenor Fund Management reported a 1.6 million-pound loss after a 12.5 million-pound profit as fee income fell and an expansion of the business increased costs. Funds under management rose to 5 billion pounds from 3.8 billion pounds in 2010 as Grosvenor Fund Management raised four new funds.

Grosvenor plans to start raising money for four new funds this year and is also considering a real estate securities fund, Preston said in an interview.

The company has about 855 million pounds in cash and funds available to invest. Acquisitions boosted the value of development projects to 3.2 billion pounds from 2.1 billion pounds. They include the Roppongi Arents residential development in Tokyo.

“This will fuel the development pipeline for the next property cycle,” Preston said.

More Diverse

Preston said he is also looking to diversify Grosvenor into new areas of real estate, such as warehouses and other industrials uses, taking a private-equity investment approach by forming a venture or buying a stake in a specialist company.

The Grosvenor family’s ancestral London land holdings are in Mayfair and Belgravia, locations that are consistently among the world’s most expensive for leasing an office or buying a home. The income these holdings generated allowed Grosvenor to diversify internationally after World War II and today 51 percent of its assets are located outside the U.K., including apartment buildings in Shanghai to a store on Rodeo Drive in Beverly Hills.

The Duke of Westminster is Britain’s wealthiest individual. He was ranked 78th in Forbes Magazine’s March list of the world’s richest people, with a net worth $11 billion.

To contact the reporter on this story: Simon Packard in London at packard@bloomberg.net.

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net.


Toyota's Hydrogen Man
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus