Grosvenor, the real estate company of the Duke of Westminster, has sold a £306 million stake in its historic Mayfair portfolio in London to the Norwegian sovereign wealth fund. The $1.7 trillion fund acquires a 25% stake in a new joint venture valued at £1.2 billion in total, thereby continuing to bet on the potential of London's West End.
Despite the sale, Grosvenor retains control and remains responsible for managing the portfolio of 175 buildings around Mount Street and Grosvenor Street, which also includes the renowned Connaught Hotel. The sale is the largest involvement of an external investor in the Mayfair property to date, developed under the leadership of the Grosvenor family since the 1720s.
This is an enormously significant step for us," said James Raynor, CEO of Grosvenor UK. "The ongoing management and control of the portfolio was essential for us.
For the Norwegian sovereign wealth fund, this is the first major real estate investment in London since 2018.
Jayesh Patel, head of the British real estate business of the sovereign wealth fund, expressed optimism about the long-term value development of the West End: "We have confidence in the potential of this location.
The £1.2 billion joint venture is part of Grosvenor's £4.8 billion UK property portfolio, mainly comprising large holdings in the Mayfair and Belgravia districts. Grosvenor retains the freehold rights to the buildings while the joint venture holds long-term leases.
The sale is intended to provide Grosvenor with financial room for new investments. Part of the proceeds is to flow into the company's growing residential construction loan business, which finances projects throughout the UK. "This business offers us a different kind of return – significantly higher than that of the portfolio," explained Raynor.
Additionally, the funds are to flow into the £1.3 billion development pipeline, including the extensive redesign of Grosvenor Square as well as a £500 million project on South Molton Street near Bond Street Station. Grosvenor is cooperating with the Japanese real estate company Mitsui Fudosan for the project.
