Grosvenor, the Duke of Westminster's property company, laid out details of ambitious commitments to global carbon reduction and diversifying its property investments as it reported full-year results that were "in line with expectations".
The group, which owns swathes of some of the UK's most valuable real estate in central London, reported a near halving in in urban property revenue profit of £52.7 million (2021: £99.7 million) and in its total return of 3.5% (2021: 5.2%).
The group said the results had been a "solid performance" in the face of challenging economic conditions.
It said the revenue profit increases in the UK has been hit by lower trading profits in its North American and diversified property investments businesses, while total return was lower as rising interest rates led to modest falls in property values.
It flagged increased new and further investment totalling £111 million (2021: £81 million) in a growing portfolio of 28 food and agtech businesses. Net profits were £2.1 million (2021: £2.4 million) across rural estates with net income from properties up 8%, while Grosvenor Farms’ trading performance was broadly flat due to investment in future projects.
It also pointed to its investment in "long-term positive impact" with a new global carbon commitment that will see all Grosvenor businesses reduce direct and indirect emissions to deliver, at a minimum, a science-based target reduction in line with limiting global warming to 1.5°C. That builds on a 24% reduction in its emissions over two years. The UK property business already has a "verified science-based target" to be net zero by 2040.
It has also committing to doubling the size of its diversified property investments business, which backs specialist investment teams globally, to £1.5 billion of equity over the next five years improving "sectoral diversification" which at present takes in industrials, logistics, student housing and life sciences.
The portfolio ranges from an industrial logistics hub in Poland to student accommodation in Brazil and the group said it is looking to expand its partner network and identify opportunities to build the property portfolio across different property sectors, applying a near term focus on Europe and Asia.
Mark Preston, chief executive of Grosvenor, said in a statement: "Our urban property, food and agtech and rural estates activities all faced challenging economic conditions yet delivered a solid overall financial performance in line with our expectations and strong examples of environmental and social benefit.
“Our established strategy of international diversification, the enduring appeal of the quality of our properties and destinations, alongside our ability to time a slowdown in our property development pipeline with falling valuations and to adjust to new post-Covid work and consumer trends played a key part in helping to balance our property returns.
“Against this backdrop our long-term view gives us the confidence to continue to invest. In the year, we have set ambitious goals to drive carbon reduction globally; advance our international property investment strategy; and expand our longstanding support for vulnerable children and young people within our communities.
The portfolio ranges from an industrial logistics hub in Poland to student accommodation in Brazil and the group said it is looking to expand its partner network and identify opportunities to build the property portfolio across different property sectors, applying a near-term focus on Europe and Asia.
Commercial values across the UK property portfolio fell by 3.7% in 2022. In contrast, its investments in sectors such as residential and logistics experienced an overall increase in values.
Preston said the group expects the remainder of 2023 to be "very challenging", which will continue to weigh on property values but also provide opportunities for the long-term investor.
“Notwithstanding that backdrop, I am clear and confident that we will stay the course with our strategy. Property as a tangible asset, and food as a basic human need, make for defensive investment options in a low-growth, inflationary world."