Grosvenor results dented as property values plunged, retail losses grew
As expected, a poor performance from its retail operations hit the Grosvenor Group in its latest (2020) trading year with the pandemic hurting its performance.
The high-end property business swung to its first loss since the financial crisis of more than a decade ago as rent and property values of its stores, offices and homes tumbled.
The Duke of Westminster-owned property company, which controls vast swathes of addresses across London’s Mayfair and Belgravia, reported a pre-tax loss of £311 million in 2020, compared to a profit of £156.5 million in 2019.
'Revenue profit' fell to £25.4 million from £65.9 million in the year ago period.
But Grosvenor also admitted the value of its property holdings had slipped by £400m to £6.7bn, with the sale of some UK assets contributing to the decline.
As well as suffering from drops in property values, Grosvenor has faced income shortfalls. With tenants struggling to pay, the company waived rent obligations for the majority of the stores on its London estate during the first UK lockdown from March to May last year.
However, it managed to collect an impressive 89% of the rents that were due in 2020 by 31 January, much higher than many of its property peers. This figure rose to 95% if Covid-19-related concessions were taken into account.
And the business was far from downbeat on Wednesday, predicting a “strong recovery” over the next two years.
It said the 12-months results were “resilient” in the context of the impact of Covid-19, with the group’s financial capacity “allowing strong support for tenants and communities during the pandemic, as well as ambitious long-term plans to support economic recovery”.
A “broadly optimistic” CEO Mark Preston said: “Our 2020 financial performance was poor by historical standards, although contextually resilient. While our numbers may have suffered, our people excelled in how they responded to the pandemic, supporting the communities we work alongside and demonstrating the best in our values and purpose. It is a performance I am especially proud of".
However, he added: “Many of [our] initiatives, combined with increased bad debt provisions and a delay in a number of sales, have inevitably affected our financial performance.
“Regardless, the growth plans we put in place before the pandemic are moving ahead. In London, we secured planning permission… for the South Molton Triangle, a sensitive and sustainable mixed-use scheme in the West End. We’ve worked to improve the resilience of our retail assets in… Liverpool – where Liverpool One continues to perform above UK sales and footfall averages – broadening the tenant mix and supporting existing retailers”.
He added: “Our strong financial capacity, remaining at £1.7 billion, gives us the strength and flexibility to capitalise on investment opportunities, as well as the confidence to continue delivering longer-term projects with a strong social impact”.
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