Grosvenor financial results for the year ending 31st December 2021
Grosvenor delivers significant improvement in financial performance and plans further diversification in property and food & agtech
Washington, D.C. 23rd May 2022
A partial recovery in economic conditions contributes to a significant improvement in 2021 financial performance. Revenue profit from urban property activities of USD$137.0m (2020: USD$51.3m) and a total return of 5.2% (2020: -2-4%) underline a strong recovery
International property business to focus on leading UK and North American cities and significantly expand third-party co-investment model to further pursue diversification around the world
Investment activity in food and agtech continues with ambition to double capital allocated to growing sector over the next 10 years
Rural estates shape long-term strategy for sustainability in the rural economy, delivering small profit
Good progress made towards reducing carbon emissions, delivering socially beneficial outcomes, and supporting charitable initiatives
Simplified governance and management structures established to better enable purpose delivery and enhanced performance
For the first time in its history, Grosvenor is reporting on the full range of its activities, all of which now operate under a single ‘Grosvenor’ brand
Grosvenor, the Washington, D.C.-based international organization whose activities span urban property, food & agtech, rural estate management and support for philanthropic initiatives, has reported significantly improved returns in its financial results for the year-ending 31st December 2021 – whilst continuing to provide strong support to tenants and communities affected by the ongoing effects of Covid-19.
2021 Performance: Mark Preston, Chief Executive of Grosvenor, said: “Despite ongoing restrictions and lockdowns remaining a feature across our markets, decisive action in response, coupled with an improving economic environment, helped us achieve a significantly improved financial performance compared to the previous year.
“This reignited activity went hand in hand with a continued commitment to supporting and finding new ways to help our tenants, get closer to our customers, and to assist the wider communities of which we are a part.
“During the year, we made good progress towards reducing our carbon emissions to achieve net zero in our directly managed operations by 2030 and to be fully net zero by 2050. We are now well advanced with completing a baseline audit of our carbon emissions across our diverse activities, and with developing credible carbon reduction plans. Meanwhile we are also investing in technologies that can disrupt the carbon intensive practices of the global food system.
“For the first time in our history, this year’s Annual Review reports on the full breadth of our activities. In addition to the development, management and investment of, and in, international urban property, they include Grosvenor Food & AgTech’s growing investment portfolio of some the industry’s most innovative businesses working towards a better food system, the management of rural estates and their environmentally sensitive habitats, and details of our support for charitable initiatives targeted at vulnerable young people.
“The presentation of Grosvenor as a single cohesive organisation is intended to better explain what we do and the positive impact our activities have, while encouraging better collaboration, synergies and innovation throughout our organisation to deliver lasting commercial, social and environmental benefit.”
Commenting on the company’s urban property activity in the United States and Canada, Steve O’Connell, Chief Executive of Grosvenor’s North American property business, said: “Each aspect of our North American property business helped contribute to our success in 2021; our teams were highly active as we participated in the economic rally that took place in the second half of the year. We also made significant progress in our environmental and social ambitions by establishing our pathway to Net Zero in 2030 and by completing our first GRESB reporting cycle.
“Our activities in 2021 reflect the diversity of our business; the strength of our portfolio of owned properties led to strong valuation gains. We advanced our significant development pipeline and we executed the third iteration of our True North partnership for our Structured Development Finance Programme.
“In Washington, D.C., we successfully concluded a targeted 10-year residential value-add programmatic partnership with two global institutional investors. We locked in favourable pricing early in the year and commenced construction on a build-to-core residential building in the Union Market neighborhood. We also and committed to three new residential development projects through our Structured Finance Programme.
“In the San Francisco Bay Area, we purchased and sold properties while advancing mixed-use development projects in Silicon Valley, Berkeley, and most recently, Oakland. “In Canada, we had a very strong year. We delivered the tallest Passive House building in British Columbia, completed a 39-story residential tower, exceeded our condo sales targets and advanced a large-scale master-plan mixed-use development site in Metro Vancouver, which will deliver approximately 3,500 new homes to the region.
“With our 2030 Net Zero pathway established and sustainable capital improvement projects underway in our properties, I am confident that our business, social and environmental ambitions will position us well for continued growth as our cities return to normal and the next generation are attracted to their many attributes.”
Commenting on Grosvenor’s core areas of activity, Mark Preston added: “Our international urban property business continued to benefit from the sectoral and geographic diversification we have pursued since the 1950s. Revenue profit increased to USD$137.0m, compared to USD$51.3m in 2020. Total return of 5.2% was helped by positive revaluations. “Our improved performance was largely driven by trading profits and strong valuation performance in North America and in our Diversified Property Investments business, with valuations particularly strong in the logistics sector. UK and European performance recovered with improved rent collections, but valuations remained subdued as central London grappled with the impacts of Covid. “We also experienced more challenging trading conditions in Asia, where Covid-related restrictions proved most stringent and enduring.
"Among other sustainability initiatives, we are investing USD$121.4m in a retrofit programme to make our London properties more energy efficient while overcoming the complex planning challenges attached to the listed status of over 1,500 of them. Our development pipeline consists of over USD$4.2bn of potential projects primarily earmarked in the UK and North America where we are also continuing to grow our financing programme to create residential, mixed-use and affordable housing schemes in our core American and Canadian markets. Meanwhile, are also continuing to further diversify our international co- investment activity which encompasses activity in Polish logistics, Australian medical facilities and Brazilian student housing.
“In our food & agtech business we committed USD$107.9m in new investments, adding exposure to five exciting new businesses, gaining exposure to fermented protein and plant-based meat alternatives. The sector offers opportunities for commercial returns as well as for improving how food is grown, produced, distributed and consumed for the benefit of human health and the environment.
“Positive impacts of our food & agtech investments include: the provision of a plant-based alternative to polystyrene and bubblewrap providing a sustainable packaging solution; investing in and opening new markets for jackfruits, a sustainable fibre and protein alternative and recovering phosphorus from wastewater to produce eco-friendly fertilisers.
“Our rural estates’ commercial activities are predominantly centred around Grosvenor Farms, one of the leading dairy and arable farms in the UK, a rural property portfolio of more than 700 properties, and, from this year, a new timber production venture: Grosvenor TimberWorks. Their impact and reach went far beyond their commercial gain (a small profit of USD$3.3m) through their contribution to the local environment and communities – from planting 430,000 trees, to producing milk with the lowest carbon footprint in the UK, to working to restore the populations of Atlantic salmon and sea trout in Scotland.”
Looking ahead
“The pandemic has accelerated the need to re-assess our assumptions around consumer needs and trends, business models and growth projections which we were already reconsidering in light of growing socio- economic, demographic, technological and environmental change.
“As part of this process, we reviewed and re-assessed our capital allocation plans across our commercial activities. Within our international property business, in the UK and North America, we will increasingly concentrate on places that are dynamic, diverse and well connected to diversify our rental income and sectoral mix. In Asia and Europe and the rest of the world, we will significantly expand our diversified property investment business which over the past 10 years has successfully developed a third-party co- investment model with like-minded specialist managers via joint ventures and funds. “We believe this approach will help us successfully access new markets and, particularly, broaden our sectoral mix, growing our overall returns and further diversifying our global property portfolio.
“Within food and agtech we plan to invest significantly in both our existing portfolio and new businesses which meet our criteria, encompassing both early-stage and mature income-producing investments. Our ambition is to double the amount of capital we allocate to this sector over the next 10 years.
“But amidst all this change, our values and long-term perspective remain at the core of everything we do. As we implement our many and diverse international and sectoral activities, we are simply attempting to strike the right balance between wanting to address today’s needs while taking responsibility for those of future generations. In other words, fulfilling our purpose to deliver lasting commercial, social and environmental benefit.
“We are deeply troubled by Russia’s invasion of Ukraine and the devastating loss of human life and humanitarian crisis that have followed. We are supporting aid efforts in a variety of ways and are proud that the Duke of Westminster chose to contribute, via the Westminster Foundation, USD$686,900 in the early days of the relief effort. “While we are optimistic about the western world’s economic rebound from the pandemic, the economic threats posed by the war in Ukraine, high inflation, high levels of debt and slowing growth in China make us cautious about the general outlook.” For more information please contact Patti Glass
Vice President, Corporate Marketing & Communications Grosvenor
+1 604 719 3767
patti.glass@grosvenor.com