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You will find a list of offices
and a glossary under
this flap. The flap unfolds
so you can refer to the
glossary as you read
through the document.
                               Grosvenor                           QUICK GLANCE                                                                                      Environment
                                                                                                                                                                     Review 2010
                               Annual Report                       Highlights
                                                                   For our financial, operational
                                                                                                                          The Grosvenor story
                                                                                                                          For background on Grosvenor                Our Environment
                               2010                                and environmental highlights                           and our history see the front cover flap   Review 2010 is
                                                                                                                                                                     available to
                                                                   see pages 02 to 09
                                                                                                                                                                     download from

                                                                   Group structure                                        Glossary                                   www.grosvenor.com
                                                                   For a summary of the Group                             For an explanation of the
Grosvenor Annual Report 2010




                                                                   structure in 2010                                      terms we use in this document
                                                                   see pages 08 to 09                                     see the back cover flap


                                                                   The Chief Executive                                    Online version
                                                                   For Mark Preston’s review                              All parts of the Annual Report and
                                                                   see pages 12 to 15                                     Accounts can be downloaded from
                                                                                                                          www.grosvenor.com

                                                                   CONTENTS

                                                                   The Grosvenor story                                         Front cover flap

                                                                   Highlights                                            02    Financial highlights
                                                                                                                         04    Operational highlights
                                                                                                                         06    Environmental highlights
                                                                                                                         08    Group structure in 2010

                                                                   Grosvenor 2010                                        10    Chairman’s statement
                                                                   Reports on the Group–wide picture                     12    Chief Executive’s review
                                                                                                                         16    Finance Director’s report
                                                                                                                         20    Group Board of Directors
                                                                                                                               and Executive Committee

                                                                   Investment and development                            22    Grosvenor Britain & Ireland
                                                                   Reviews of our regional investment                    34    Grosvenor Americas
                                                                   and development businesses                            44    Grosvenor Continental Europe
                                                                                                                         50    Grosvenor Asia Pacific
                                                                                                                         56    Grosvenor Australia

                                                                   Fund management                                       62    Grosvenor Fund Management
                                                                   Review of our international
                                                                   fund management business

                                                                   Company information                                   72    Five–year summary
                                                                                                                               Grosvenor offices (back cover flap)
                                                                                                                               Glossary (back cover flap)


                                                                   The Directors’ report and financial
                                                                   statements for 2010 are included in
                                                                   the full Annual Report and Accounts,
                                                                   which can be downloaded from
                                                                   www.grosvenor.com




                                                                   Front cover: 10:35 hours, Mount Street, London, UK
                                                                   In Mount Street, in London’s Mayfair, we completed public
                                                                   realm works to enhance an exceptional luxury retail destination.
                                                                   Back cover: 9.05 hours, Capitol Hill, Washington DC
                                                                   Grosvenor has had an office in the US capital since 1988.
                               Living cities   www.grosvenor.com   Our latest project in the city is a multi–family development.
                                            Grosvenor                           QUICK GLANCE                                                                                      Environment
                                                                                                                                                                                  Review 2010
                                            Annual Report                       Highlights
                                                                                For our financial, operational
                                                                                                                                       The Grosvenor story
                                                                                                                                       For background on Grosvenor                Our Environment
                                            and Accounts                        and environmental highlights                           and our history see the front cover flap   Review 2010 is
                                                                                                                                                                                  available to
                                            2010
                                                                                see pages 02 to 09
                                                                                                                                                                                  download from

                                                                                Group structure                                        Glossary                                   www.grosvenor.com
                                                                                For a summary of the Group                             For an explanation of the
Grosvenor Annual Report and Accounts 2010




                                                                                structure in 2010                                      terms we use in this document
                                                                                see pages 08 to 09                                     see the back cover flap


                                                                                The Chief Executive                                    Online version
                                                                                For Mark Preston’s review                              All parts of the Annual Report and
                                                                                see pages 12 to 15                                     Accounts can be downloaded from
                                                                                                                                       www.grosvenor.com

                                                                                CONTENTS

                                                                                The Grosvenor story                                         Front cover flap

                                                                                Highlights                                            02    Financial highlights
                                                                                                                                      04    Operational highlights
                                                                                                                                      06    Environmental highlights
                                                                                                                                      08    Group structure in 2010

                                                                                Grosvenor 2010                                        10    Chairman’s statement
                                                                                Reports on the Group–wide picture                     12    Chief Executive’s review
                                                                                                                                      16    Finance Director’s report
                                                                                                                                      20    Group Board of Directors
                                                                                                                                            and Executive Committee

                                                                                Investment and development                            22    Grosvenor Britain & Ireland
                                                                                Reviews of our regional investment                    34    Grosvenor Americas
                                                                                and development businesses                            44    Grosvenor Continental Europe
                                                                                                                                      50    Grosvenor Asia Pacific
                                                                                                                                      56    Grosvenor Australia

                                                                                Fund management                                       62    Grosvenor Fund Management
                                                                                Review of our international
                                                                                fund management business

                                                                                Accounts
                                                                                Directors’ reports and financial statements
                                                                                73   Corporate governance                             84 Balance sheets
                                                                                75   Remuneration report                              85 Consolidated statement
                                                                                76   Directors’ report                                    of cashflows
                                                                                80   Statement of Directors’                          86 Notes to the financial statements
                                                                                     responsibilities                                 124 Consolidated income statement
                                                                                80   Corporate advisers and bankers                       presented in US Dollars
                                                                                81   Independent auditor’s report to the              125 Consolidated balance sheet
                                                                                     members of Grosvenor Group Limited                   presented in US Dollars
                                                                                82   Consolidated income statement                    126 Consolidated income statement
                                                                                83   Consolidated statement                               presented in Euros
                                                                                     of comprehensive income                          127 Consolidated balance sheet
                                                                                83   Consolidated statement                               presented in Euros
                                                                                     of changes in equity                             128 Five–year summary

                                                                                Offices and Glossary                                        Back cover flap




                                                                                Front cover: 10:35 hours, Mount Street, London, UK
                                                                                In Mount Street, in London’s Mayfair, we completed public
                                                                                realm works to enhance an exceptional luxury retail destination.
                                                                                Back cover: 9.05 hours, Capitol Hill, Washington DC
                                                                                Grosvenor has had an office in the US capital since 1988.
                                            Living cities   www.grosvenor.com   Our latest project in the city is a multi–family development.
                                                                                                                                                                                                                                                                                                               Highlights
The Grosvenor story                                                                                                                                                                                                                                         Grosvenor Annual Report 2010   Introduction   01
                                                                                                                                                                                                                                                            www.grosvenor.com




1677
                      The family and the land
                      The Grosvenor family history stretches back almost a thousand years, to the time of William
                                                                                                                            1 Sir Thomas Grosvenor
                                                                                                                              and Mary Davies
                                                                                                                                                                                                 5 Family portraits in the
                                                                                                                                                                                                   reception at The Grosvenor
                                                                                                                                                                                                                                                        1
                                                                                                                                                                                                                                                            Grosvenor is a privately-owned
                                                                                                                                                                                                                                                            property group, active in some
                      the Conqueror. However, the origins of the property business lie in the land in London which          2 Grosvenor Square,
                                                                                                                                                                                                   Office, London
                      came into the family in 1677 with the marriage of Mary Davies and Sir Thomas Grosvenor —                Mayfair, in 1753                                                   6 Map of the land (black),
                      500 acres of swamp, pasture and orchards to the west of the City, of which 300 acres                                                                                         the greater part of which


                                                                                                                                                                                                                                                            of the world’s most dynamic cities.
                                                                                                                            3 Belgrave Square,                                                     came into the Grosvenor
                      remain with the family today as Grosvenor’s London estate.                                              Belgravia, in 1827                                                   family in 1677, as
                                                                                                                            4 The opening of Grosvenor’s                                           subsequently developed
                                                                                                                              first international                                                   (red)
                                                                                                                              development, at Annacis                                            7 Outline of Grosvenor’s
                                                                                                                              Island, Vancouver, 1955                                              London estate today


                                                                                                                                                                                                                                                            Our future success is tied to sustainable
1720s
                       Mayfair, London                                                                                      6



                                                                                                                                                                                                                                                            growth of the cities in which we have
                      ‘Mayfair’, the northern part of this land, took its name from the fair held here in May until
                       well into the 19th century. In 1720, the family began developing the land into a fashionable
                       residential area, centred on Grosvenor Square. The area’s character continued to evolve
                       through subsequent redevelopment: in the 19th century, shops and, later, embassies and
                       diplomatic residences moved in; during the 20th century, it saw the westerly migration
                       of office users from the war–damaged City of London. Today, almost the whole of Mayfair,
                                                                                                                                                                                                                                                            a presence. We have a vested interest
                       which now contains a cosmopolitan mix of commercial and residential property,
                       is included in a statutory Conservation Area.                                                                                                                                                                                        in the future shape of the urban
                                                                                                                                                                                                                                                            landscape and aim to help create and
1820s
                                                                                                                                                                                                                                                        2


                                                                                                                                                                                                                                                            manage attractive and vibrant cities
                       Belgravia, London
                      ‘Belgravia’, which lies south west of Mayfair, was originally part of the ‘Five Fields’ — open land
                       between Hyde Park and the Thames. The end of the Napoleonic Wars and the conversion

                                                                                                                                                                                                                                                            in which people choose to live and work.
                       of nearby Buckingham House into a palace for George IV prompted the Grosvenors to develop
                       it. In the 1820s, the family’s surveyor, together with master builder Thomas Cubitt, oversaw
                       the creation of an elegant estate in the classic Regency style of squares, streets and crescents
                       overlooking private gardens. The vast majority of Cubitt’s work survives and almost the
                       whole of Belgravia is included in a statutory Conservation Area, now encompassing housing,
                       commercial and institutional headquarters, retail and, on the periphery, modern offices.




1950s
                      International expansion                                                                                                                                                                                                           3
                      During the second half of the 20th century, Grosvenor began to apply its estate
                      management skills of investment, development and asset management elsewhere
                      in the UK. The business expanded, successively, into the Americas (from the 1950s),
                      Australia (from the 1960s), Asia Pacific (from the early 1990s) and Continental Europe
                      (later that decade). Many projects were undertaken in partnership with other investors,
                                                                                                                            7                                      OXFORD S
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                      leading Grosvenor gradually into fund management.




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                      business was formalised in 2005. Today, we have 18 offices in 11 countries and assets in a                                                                                 PIC

                      total of 17 countries. Our corporate structure continues to evolve with the maturing of the                          HYDE PARK CORNER
                      Group (see Chief Executive’s review, page 12).                                                                                                                              GREEN PARK
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                      Further information on Grosvenor is available at www.grosvenor.com.
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                      Grosvenor remains privately owned. The Shareholders — the Trustees of the Grosvenor                                                                                                                       HA
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                      Estate — represent the legal entities through which shares and assets are held ‘in trust’                                   RD                                                                    KW
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                      for the benefit of current and future members of the Grosvenor family. The family is                                   KIN
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                      headed by the 6th Duke of Westminster, who is Chairman of the Trustees.                                                                                                                                      D
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                      Further information on the Grosvenor family is available at www.grosvenorestate.com.
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                                                                                                                                                                                                                                                                                    Highlights
Grosvenor Annual Report 2010   Financial highlights                                             02   Grosvenor Annual Report 2010                        Financial highlights                                                                                                  03
www.grosvenor.com                                                                                    www.grosvenor.com



FInAncIAl                      An overview of our key performance figures
hIGhlIGhTs                     for 2010. There is a glossary on the back
                               cover flap.

                               £284.0m
                                                                                                     Shareholders’ funds*                                Revenue profit £m*                                               Total returns % (excluding currency movements)
                                                                                                     by Operating Company                                by Operating Company                                            by Operating Company

                                                                                                                                                          32                                                             16
                               Gross rents (including share of joint ventures)                                                                                                                                                        16.0
                               2009 £318.1m (see Accounts Note 4)                                                                                                                          28.7




                               £64.2m
                                                                                                                                                          24                                                             12


                                                                                                                                                          16                                                             8                                                    9.7
                                                                                                                                                                                                                                             8.6
                                                                                                                                                                          16.0                                                                                         7.5
                               Revenue profit                                                                                                                                                                      12.5
                                                                                                                                                           8                                                             4
                               2009 £62.2m (see Accounts Note 4)                                                                                                                    9.0            8.0     8.0                                                3.9




                               £394.8m
                                                                                                                                                                                                                                                     3.1
                                                                                                                                                           0                                                             0


                                                                                                            Grosvenor Britain & Ireland                            Grosvenor Britain & Ireland                                Grosvenor Britain & Ireland
                               Profit before tax                                                             £1,317.4m                            50.2%             £16.0m                                                     16.0%
                               2009 £235.8m loss
                                                                                                            Grosvenor Americas                                     Grosvenor Americas                                         Grosvenor Americas


                               £5,460m
                                                                                                            £476.5m                              18.2%             £9.0m                                                      8.6%
                                                                                                            Grosvenor Continental Europe                           Grosvenor Continental Europe                               Grosvenor Continental Europe
                                                                                                            £404.7m                              15.4%             £28.7m                                                     3.1%
                               Property assets                                                              Grosvenor Asia Pacific                                  Grosvenor Asia Pacific                                      Grosvenor Asia Pacific
                               2009 £5,222m (see Accounts Note 18)                                          £203.4m                               7.8%             £8.0m                                                      3.9%



                               £2,776m
                                                                                                            Grosvenor Australia                                    Grosvenor Australia                                        Grosvenor Australia
                                                                                                            £188.5m                               7.2%             £8.0m                                                      7.5%
                                                                                                            Grosvenor Fund Management                              Grosvenor Fund Management                                  Grosvenor Group
                               Net asset value
                                                                                                            £31.9m                                1.2%             £12.5m                                                     9.7%
                               2009 £2,543m                                                          *Excludes the Holding Company.                      *Excludes the Holding Company.                                  Total return on property assets is not a relevant



                               £2,649m
                                                                                                                                                                                                                         measure for Grosvenor Fund Management.




                               Shareholders’ funds
                               2009 £2,387m



                               £829m
                                                                                                     Shareholders’ funds £bn                             Revenue profit £m                                                Total returns % (including currency movements)


                                                                                                      3.0                                                  90                                                            20
                               Financial capacity (cash and undrawn facilities)                                           2.9
                                                                                                                                                           60                       73.4
                               2009 £964m                                                             2.5                           2.7
                                                                                                                                                                                                                 64.2
                                                                                                                                                  2.6                                                    62.2



                               10.9%
                                                                                                                                                                                                                         15
                                                                                                                   2.4                     2.4                                                                                        15.5
                                                                                                                                                           30                                                                                 14.4
                                                                                                      2.0
                                                                                                                                                                                                                         10                                                  10.9
                                                                                                                                                               0
                               Total return on property assets (including currency movements)         1.5
                               2009 —2.8%                                                                                                                 –30
                                                                                                                                                                                                                          5
                                                                                                      1.0
                                                                                                                                                          –60
                                                                                                                                                                                             (76.7)                       0
                                                                                                      0.5
                                                                                                                                                          –90
                                                                                                                                                                                                                                                                    –2.8
                                                                                                                                                                          (107.9)                                                                      –4.1
                                                                                                       0                                                 –120                                                            -5
                                                                                                                    06      07        08    09     10                       06        07          08      09      10                   06       07         08        09       10
                                                                                                                                                                                                                                                                                                            Highlights
Grosvenor Annual Report 2010                    Operational highlights                                       04    Grosvenor Annual Report 2010                                  Operational highlights                                                                                               05
www.grosvenor.com                                                                                                  www.grosvenor.com



OpERATIOnAl                                     An overview of our key operational figures
hIGhlIGhTs                                      for 2010. There is a glossary on the back
                                                cover flap.

                                                £10.9bn
                                                                                                                                                                         Grosvenor                                                       Third party                               Future          Assets
                                                                                                                                                                                      Financial                                                                              development           under
                                                                                                                                               Investment       Development              assets            Total           Investment    Development             Total       commitment       management
                                                                                                                                                      £m                £m                  £m               £m                   £m             £m                £m                 £m              £m

                                                Assets under management                                             Britain & Ireland                 1,710              275                —             1,985              1,140               101            1,241               291            3,517
                                                2009 £10.2bn                                                        Americas                           589                40                5               634                430                 8             438                 21            1,093



                                                £9.8bn
                                                                                                                    Continental Europe               1,398                87                —             1,485                  —                 —                —                37            1,522
                                                                                                                    Asia Pacific                         322               19                6               347                 98                19              117                 —              464
                                                                                                                    Australia                          260                 6                —               266                134                 6             140                 79              485
                                                                                                                    Fund Management                    656                67               20               743              3,078                 —           3,078                  —            3,821
                                                Investment properties under management                              Total                        4,935                494                  31           5,460               4,880               134            5,014               428            10,902
                                                2009 £9.1bn



                                                £1.1bn
                                                                                                                    Commercial                       1,364                78                6             1,448              1,390                 6           1,396                 94           2,938
                                                                                                                    Retail                           2,575               159               14             2,748              2,044                15           2,059                 67           4,874
                                                                                                                    Residential                        996               257               11             1,264              1,446               113           1,559                267           3,090
                                                                                                                    Total                        4,935                494                  31           5,460               4,880               134            5,014               428            10,902
                                                Development projects under management
                                                2009 £1.1bn



                                                1,093
                                                                                                                                           Grosvenor’s share of investment                                                      Future development commitment
                                                                                                                                           properties, development properties and                                               represents the expected costs to complete
                                                                                                                                           financial investments in property assets.                                             the committed development programme.

                                                Number of properties under management
                                                2009 1,046                                                                                                                Third party shares of property                                               Assets under management represents



                                                93.5%
                                                                                                                                                                          assets managed by Grosvenor.                                                 the total investment in property assets
                                                                                                                                                                                                                                                       managed by the Group (Grosvenor and
                                                                                                                                                                                                                                                       third party investors), including the future
                                                                                                                                                                                                                                                       costs of committed developments.
                                                Occupancy rate
                                                2009 91.0%



                                                547
                                                Employees
                                                2009 562


 Assets under management

 By sector                                      By Operating Company                      By activity              Assets under management £bn                                   Number of properties                                                  Employees


                                                                                                                   14                                                            1,200                                                                 700

                                                                                                                                                                                                           1,134
                                                                                                                   12               12.9                                                          1,088            1,087                1,093          600
                                                                                                                                              12.4                               1,000                                        1,046                                                 611
                                                                                                                                                                                                                                                                           584
                                                                                                                             11.0                                 10.9                                                                                                                      562
                                                                                                                   10                                                                                                                                  500                                         547
                                                                                                                                                         10.2                        800                                                                           501

                                                                                                                   8                                                                                                                                   400
                                                                                                                                                                                     600
                                                                                                                   6                                                                                                                                   300

                                                                                                                                                                                     400
     Commercial*                                   Grosvenor Britain & Ireland               Investment            4                                                                                                                                   200
     £2,938m                            27.0%      £3,517m                        32.3%      £9,842m       90.3%                                                                     200
                                                                                                                   2                                                                                                                                    100
     Retail                                        Grosvenor Americas                        Development
     £4,874m                            44.7%      £1,093m                        10.0%      £1,060m        9.7%
                                                                                                                   0                                                                   0                                                                  0
     Residential                                   Grosvenor Continental Europe                                               06      07       08         09        10                             06        07     08         09        10                          06      07       08     09       10
     £3,090m                            28.3%      £1,522m                        14.0%
*Commercial includes o ce and industrial.          Grosvenor Asia Pacific
                                                   £464m                          4.3%
                                                   Grosvenor Australia
                                                   £485m                           4.4%
                                                   Grosvenor Fund Management
                                                   £3,821m                        35.0%
                                                                                                                                                                                                                                                                              Highlights
Grosvenor Annual Report 2010   Environmental highlights                                                               06   Grosvenor Annual Report 2010                         Environmental highlights                                                             07
www.grosvenor.com                                                                                                          www.grosvenor.com



EnvIROnmEnTAl A summary of our environmental                                                                                                                                    For more information please see
hIGhlIGhTs    performance for 2010.                                                                                                                                             our Environment Review 2010
                                                                                                                                                                                at www.grosvenor.com.
                               Group-wide performance                                                                      Waste footprint by mass (%)                          Carbon emissions (tCO2e)
                               Directly-managed properties and our own offices                                              2010                                                 Absolute


                               4.0%                                                                                                               0.2%                          60,000                                 The total emissions from our activities in the
                                                                                                                                                                                                                       common parts of the buildings which we directly
                                                                                                                                                                                                                       manage and our own o ces, irrespective of
                               reduction in absolute carbon emissions; 2009: 52,911 tCO2e, 2010: 50,811 tCO2e                                            13.7%
                                                                                                                                                                                                                       when they entered the portfolio, plus

                               3.4%
                                                                                                                                                                                50,000                                 business—related travel. In 2010, electricity
                                                                                                                                                                                                                       consumption data was recorded from 413
                                                                                                                                                                                                                       properties, 99.5% of the directly–managed
                               reduction in carbon emissions by intensity; 2009: 126kg CO2e/m2, 2010: 122kg CO2e/m2                                                             40,000                                 assets where Grosvenor is responsible for

                               9,135 metric tonnes
                                                                                                                                                                                                                       energy provision.
                                                                                                                            49.4%                                 31.6%                                                The carbon footprint covers the following areas
                                                                                                                                                                                30,000                                 defined by the Greenhouse Gas protocol:
                               total waste footprint (by mass)
                                                                                                                                                                                                                           Scope 1: Direct emissions from sources
                               51.0%                                                                                                                                            20,000
                                                                                                                                                                                                                           owned or controlled by Grosvenor, for
                                                                                                                                                                                                                           example company vehicles
                               of waste footprint diverted from going direct to landfill                                                                                                                                    Scope 2: Indirect emissions from purchased
                                                                                                                                                  5.0%

                               7.3%
                                                                                                                                                                                                                           electricity. These emissions are considered
                                                                                                                                                                                10,000    2009             2010            indirect because the emissions physically
                                                                                                                              Sent to an o -site hazardous waste                                                           occur at the point of electricity production
                               reduction in water consumption; 2009: 883,316m3, 2010: 819,264m3                               treatment facility                                                                           Scope 3: Indirect emissions from other
                                                                                                                              Incinerated (with or without energy recovery)                                                Company activities within the organisational
                                                                                                                                                                                                                           boundary, such as business travel, waste
                                                                                                                              Recycled (following on-site segregation)                                                     disposal or tenant activity.
                                                                                                                              Sent to an o -site materials recovery
                                                                                                                              recycling facility
                               Operating company highlights                                                                                                                     Carbon emissions (kgCO2e/m2)
                                                                                                                              Sent direct to landfill                            Intensity/like-for-like portfolio
                                                                                                                           Waste (measured by mass) produced by 35 buildings
                                                                                                                                                                                                                       Emissions per m2 from our activities in the
                               10%                                                                                         we directly manage and our own o ces. In addition,   140
                                                                                                                                                                                                                       common parts of 373 buildings which we
                                                                                                                           29 further properties were able to record an
                                                                                                                                                                                                                       directly manage and our own o ces. This
                                                                                                                           estimated total of 38,000m3 of waste measured        120
                               lower energy consumption at our largest office,                                                                                                                                          uses a static portfolio approach to give a
                                                                                                                           by volume. The waste footprints do not include
                               70 Grosvenor Street in London, UK                                                                                                                                                       like–for–like comparison, excluding any
                                                                                                                           properties where tenants are responsible for
                                                                                                                                                                                100                                    properties that exited or entered our portfolio
                               4.5 Star
                                                                                                                           managing their waste. While waste data (either by
                                                                                                                                                                                                                       during 2009–2010. Properties where the data
                                                                                                                           mass or volume) was received from only 44% of the
                                                                                                                                                                                                                       has changed significantly from 2009, without
                                                                                                                           149 properties where Grosvenor is responsible for    80
                               NABERS (National Australian Built Environment Rating System) Energy Rating
                                                                                                                                                                                0                                      reasonable explanation have also been excluded.
                                                                                                                           waste management, these tended to be the larger
                                                                                                                                                                                                                       These represent only 1.5% of the total emissions
                               at Bank of Queensland Centre in Brisbane, Australia                                         assets — by m2 data coverage was 67%.
                                                                                                                                                                                60                                     and are therefore considered to be immaterial.

                               100%                                                                                                                                             40
                               UK office and retail assets managed by Grosvenor Fund Management
                               now ISO14001 accredited                                                                                                                          20


                               75%                                                                                                                                                        2009             2010

                               of electricity to Grosvenor Britain & Ireland’s directly–managed
                               London estate properties now supplied by ‘green’ energy supplier Ecotricity
                                                                                                                                                                                Water consumption (0,000m3 of water)

                               ‘Excellent’                                                                                                                                      Like-for-like portfolio

                                                                                                                                                                                                                       Water consumption from 124 buildings we
                                                                                                                                                                                1,000
                               Ecohomes rating at 1, Lochmore House in Belgravia, London, UK                                                                                                                           directly manage and occupy. This uses a static
                                                                                                                                                                                900                                    portfolio approach to give a like–for–like
                                                                                                                                                                                                                       comparison excluding any properties that,
                                                                                                                                                                                800                                    during 2009–2010, exited or entered our
                                                                                                                                                                                700
                                                                                                                                                                                                                       portfolio, changed the service provision, or
                                                                                                                                                                                                                       were unable to report accurate data. There
                                                                                                                                                                                600                                    was a 7.3% reduction in water use in our
                                                                                                                                                                                                                       like–for–like portfolio in 2010. The water footprint
                                                                                                                                                                                500                                    does not include properties where our tenants
                                                                                                                                                                                                                       are responsible for water provision. In 2010,
                                                                                                                                                                                400
                                                                                                                                                                                                                       our absolute water footprint covering all 163
                                                                                                                                                                                300                                    properties was 1,189,308m3, compared to
                                                                                                                                                                                                                       1,047,117m3 in 2009. The increase was due
                                                                                                                                                                                200                                    primarily to a rise in the number of properties
                                                                                                                                                                                                                       reporting. In 2010, water consumption data was
                                                                                                                                                                                100                                    recorded from 92% of those properties where
                                                                                                                                                                                          2009             2010        Grosvenor is identified as being responsible for
                                                                                                                                                                                                                       water provision.
                                                                                                                                                                                                                                                                                          Highlights
Grosvenor Annual Report 2010                                 Group structure                                                                       08   Grosvenor Annual Report 2010              Group structure                                                                    09
www.grosvenor.com                                                                                                                                       www.grosvenor.com



GROup                                                        In 2010, we had five regional investment and                                                                                          There is a history of Grosvenor on the
sTRucTuRE                                                    development businesses, primarily deploying                                                                                          front cover flap. The Group structure was
                                                             proprietary capital, and a single international                                                                                      modified on 1 January 2011: the present
                                                             fund management business, investing and                                                                                              structure is described on page 15.
                                                             managing third-party investor capital.



   Investment and development                                                                                                                              Fund management

                                                                                                         £7,081m                                                                                                                             £3,821m
   Grosvenor’s regional investment and development businesses —                                                                                            Grosvenor Fund Management offers a range of sector and
   five in 2010 — have a presence in some of the world’s most dynamic                                                                                       regional specialist property investment funds which aim to
   cities. Our activities span retail, commercial and residential property,                                                                                deliver attractive, risk–adjusted returns. Our activities cover
   as well as mixed–use and urban regeneration schemes. Sometimes           Assets under management                                                        most of Grosvenor’s operating regions, where we employ                            Funds under management
   we act as developer, working alone or as part of a joint venture                                                                                        professionals with local knowledge and skills. Aligning our
   from project inception to completion; sometimes we act as investor,                                                                                     interests with our partners and building long–term relationships
   acquiring existing buildings and focusing on strategic asset                                                                                            are of paramount importance to us.
   management. In all cases, the insight which comes from being an
   international player, combined with years of experience on the
   ground, provides us with a deep understanding of the cities in which
   we operate.
   Grosvenor                              Grosvenor                  Grosvenor                 Grosvenor                 Grosvenor                         Grosvenor            USA                       UK                       Continental              Asia
   Britain & Ireland                      Americas                   Continental Europe*       Asia Pacific               Australia                         Fund Management                                                         Europe
   Assets under management                Assets under management    Assets under management   Assets under management   Assets under management                                Funds under management    Funds under management   Funds under management   Funds under management

   £3,517m                                £1,093m                    £1,522m                   £464m                     £485m                                                  £738m                     £1,820m                  £735m                    £528m
   O ces                                  O ces                      O ces                     O ces                     O ces                                                  O ces                     O ces                    O ces                    O ces

   • Edinburgh                            • Calgary                  • Luxembourg              • Beijing                 • Brisbane                                             • Philadelphia            • Liverpool              • Luxembourg             • Shanghai
   • London                               • San Francisco            • Porto (Sonae Sierra)    • Hong Kong               • Sydney                                                                         • London                 • Madrid                 • Tokyo
                                          • Vancouver                                          • Shanghai                                                                                                                          • Milan
                                          • Washington, DC                                     • Tokyo                                                                                                                             • Paris




   * Grosvenor’s share of assets held
     by Sonae Sierra is included within
     Continental Europe regardless
     of the Brazilian component.
                                                                                                                    Grosvenor Annual Report 2010   chairman’s statement                                                                11
                                                                                                                    www.grosvenor.com



                                                                                                                    chAIRmAn’s                     The uncertain financial climate continued
                                                                                                                    sTATEmEnT                      throughout 2010 and there remain threats
                                                                                                                                                   to a sustained global economic recovery.




                                                                                                                                                                                                                                             Group
                                                                                                                                                   However, Grosvenor experienced only a
                                                                                                                                                   shallow loss of equity during the worst
                                                                                                                    lesley Knox
                                                                                                                                                   years of the downturn and, in 2010, saw
                                                                                                                    Group Chairman                 total returns revert to trend.
                                                                                                                                                   We attribute this to our continued commitment to diversification and prudent
                                                                                                                                                   approach to financing the business. In the second half of the year there were
                                                                                                                                                   clear signs of the start of a new property cycle in many of our markets, reflected
                                                                                                                                                   in renewed investment and development activity around the Group, and we
                                                                                                                                                   finished the year with a profit before tax of £394.8m.

                                                                                                                                                   Diversification
                                                                                                                                                   We are as committed as ever to our objective, which is to develop as a diversified
                                                                                                                                                   international property group, with a core holding in the UK.
                                                                                                                                                   While the Group is united by a common shareholder, approach, culture and
                                                                                                                                                   operating requirements, it comprises businesses which have all matured to the
                                                                                                                                                   point where strategy and implementation can be the responsibility of their own
                                                                                                                                                   boards. Our regional Operating Companies all specialise in urban property, but
                                                                                                                                                   with specific geographical markets, varying sectoral emphases and a differing
                                                                                                                                                   balance between investment and development activity. All are managed locally
                                                                                                                                                   and focus on investing effectively the proprietary capital we allocate to them.
                                                                                                                                                   Our international fund management business focuses on managing third–party
                                                                                                                                                   investor capital and delivering attractive risk–adjusted returns in their preferred
                                                                                                                    Our continuing financial        markets. In addition, we have indirect investments — now all managed centrally.
                                                                                                                    resilience through 2010        Grosvenor’s way of doing business
                                                                                                                    reflects market recovery,       The Group and its Operating Companies are characterised as much by how we
                                                                                                                    the effective way we have      do business as by what we do — particularly our attitude to business relationships
                                                                                                                    managed our own assets         as a privately–owned Group with a long–term perspective.
                                                                                                                    and strong relationships
                                                                                                                                                   Our continuing financial resilience through 2010 reflects market recovery, the
                                                                                                                    with our banks and other
                                                                                                                                                   effective way we have managed our own assets and strong relationships with our
                                                                                                                    sources of capital.            banks and other sources of capital. We will continue to work hard at maintaining
                                                                                                                                                   these relationships.

                                                                                                                                                   The changing Board
                                                                                                                                                   I would like to thank my predecessor, Lord Home, for leading us successfully through
                                                                                                                                                   a time of turbulence in world markets. He has passed on to me oversight of a Group
                                                                                                                                                   which is in robust financial shape and well–equipped to tackle our strategic priorities.
                                                                                                                                                   The composition of the Board has changed to reflect the maturing of the Group.
                                                                                                                                                   As of 1 January 2011, it has been slimmed to eight directors: the six Non–Executive
                                                                                                                                                   Directors; the Group Chief Executive, Mark Preston; and the Group Finance Director,
                                                                                                                                                   Nick Scarles. It focuses on Group strategy and the performance of the Group’s
                                                                                                                                                   investments. The Group Executive Committee, which is now a nominated committee
                                                                                                                                                   of the Board, has become the main forum for discussing the interface between
                                                                                                                                                   Group and Operating Company strategy, and for managing operational issues and
                                                                                                                                                   matters which are common to different parts of the Group and require co–ordination.
                                                                                                                                                   It comprises our two Executive Directors and the Chief Executives of our Operating
                                                                                                                                                   Companies. I look forward to their continued contribution to the development of
                                                                                                                                                   the Group.
                                                                                                                                                   I am fortunate to have become Chairman at a time when Grosvenor can so confidently
                                                                                                                                                   play to its strengths. There is a great deal to admire here. My role is to support, and
                                                                                                                                                   where necessary challenge, Mark Preston and his team as we embark on the next
                                                                                                                                                   stage in the Group’s evolution.
07:00 hours houhai, Beijing, china
We opened an office in Beijing – our fourth office in Asia and an important statement of intent for our proprietary                                  Lesley Knox Group Chairman
business, Grosvenor Asia Pacific, and for Grosvenor Fund Management.                                                                                17 March 2011
                                                                                                              Grosvenor Annual Report 2010   chief Executive’s review                                                          13
                                                                                                              www.grosvenor.com



                                                                                                              chIEF                          With property values recovering in all
                                                                                                              ExEcuTIvE’s                    our markets, particularly in the UK,
                                                                                                              REvIEw                         our financial performance in 2010 was




                                                                                                                                                                                                                                       Group
                                                                                                                                             significantly better than in 2009 and
                                                                                                                                             slightly ahead of the longer-term trend.
                                                                                                              mark preston
                                                                                                              Group Chief
                                                                                                                                             We have been through two very tough
                                                                                                              Executive                      years for the property industry but
                                                                                                                                             Grosvenor, with a long history of navigating
                                                                                                                                             the low points of property cycles, has again
                                                                                                                                             emerged in good shape, with ambitious
                                                                                                                                             plans for the future.
                                                                                                                                             During 2010, our Operating Companies began reinvesting in their markets,
                                                                                                                                             using some of the significant financial capacity we had built up in the previous
                                                                                                                                             two years. This Annual Report is filled with examples of our businesses sowing
                                                                                                                                             the seeds for returns in the years to come, such as the replenishment of the
                                                                                                                                             development pipeline in our core London estate and the growth of residential
                                                                                                                                             development activity in most parts of the Group — this becoming an increasingly
                                                                                                                                             important sector of focus for us.
                                                                                                                                             Thanks to the efforts of staff in all parts of the Group, we were able to start
                                                                                                                                             2011 in an optimistic mood, confident that in 2010 we laid the foundations
                                                                                                                                             for a fruitful decade.

                                                                                                                                             Financial performance
                                                                                                                                             The key numbers for Grosvenor are: total return of 10.9%, which has improved
                                                                                                                                             significantly (–2.8% in 2009); revenue profit of £64.2m, which compares favourably
                                                                                                                                             with the figure last year of £62.2m; and assets under management of £10.9bn
                                                                                                                                             (£10.2bn in 2009).
                                                                                                                                             Each Operating Company reports on these performance measures in their own
                                                                                                                                             sections of this report.
                                                                                                                                             During 2010, we adjusted our operating arrangements and took the necessary steps
                                                                                                                                             to ensure our financial position remained strong in the face of so many external
                                                                                                                                             uncertainties. In addition to making further asset sales, we reduced costs in certain
                                                                                                                                             areas and successfully secured both re–financings and new financings. These
                                                                                                                                             measures have assured liquidity, increased efficiency and reduced gearing.
                                                                                                                                             Nick Scarles covers this in more detail (see Finance Director’s report, page 16), while
                                                                                                                                             the significant operational changes in our London estate teams are covered in the
                                                                                                                                             review of Grosvenor Britain & Ireland (see page 22).

                                                                                                                                             Group strategy
                                                                                                                                             The Group’s strategy is to continue to develop Grosvenor as a diversified
                                                                                                              In the autumn of 2008,         international property group, with a core holding in the UK. This approach enables
                                                                                                              I set out the ‘Big six’        us to achieve geographic and sectoral diversification Group–wide and a broad tenant
                                                                                                              elements of Group strategy.    base, with the objective of maximising returns over the long–term, with due regard
                                                                                                              The momentum behind            to risk. The manifestation of this is in the exposure of the Group to many of the
                                                                                                              them is now considerable       world’s major cities.
                                                                                                              and we made significant         In the autumn of 2008, I set out the ‘Big Six’ elements of Group strategy. The
                                                                                                              further progress with their    momentum behind them is now considerable and, having weathered the recession
                                                                                                              implementation in 2010.        well, we were able to make significant further progress with their implementation
                                                                                                                                             in 2010, summarised below.
                                                                                                                                             Value creation is the mantra of all parts of Grosvenor but with a particular
                                                                                                                                             focus on growing revenue profit. In our proprietary businesses, we currently seek
                                                                                                                                             to achieve this by investing in new development and other value–adding activity,
08:45 hours Belgravia, london, England                                                                                                       while concentrating also on improving the level of service we offer to occupiers.
Reinvestment in Mayfair and Belgravia is a priority. Where appropriate, we buy back leases and revitalise                                    At year end, our managed development pipeline of opportunities stood at around
locations that are important for our London estate as a whole – as we are doing in Grosvenor Crescent, just                                  £2.5bn of which £1.1bn was already committed. This reflects our strategy of
off Belgrave Square (shown here).                                                                                                            reinvesting in markets after the deliberate decline over the previous four years.
                                                                                                                                             In Grosvenor Fund Management, we aim to launch new funds which capture the
Grosvenor Annual Report 2010   chief Executive’s review                                                            14   Grosvenor Annual Report 2010   chief Executive’s review                                                              15
www.grosvenor.com                                                                                                       www.grosvenor.com


                               opportunities we identify in our markets, providing investors with attractive risk–                                     capital in Grosvenor–managed funds. In the medium–term, we expect to consider
                               adjusted returns and excellent client service. Occupancy rates averaged 93.5%                                           other indirect investments as a further means of achieving diversification Group–wide
                               (2009: 91.0%).                                                                                                          and maximising risk–adjusted returns.
                               Developing the skills and careers of our people is critical to our success. One                                         Our new Group structure, shown in the diagram below, distinguishes clearly




                                                                                                                                                                                                                                                  Group
                               of the ways we help them is by giving staff experience of working in different parts                                    between three areas of activity:
                               of the Group: we are achieving this through transfers between Operating Companies
                                                                                                                                                       — direct investment in property, with the proprietary capital we allocate to our
                               and secondments to the Holding Company. We have also hosted the second of our
                                                                                                                                                         regional Operating Companies;
                               leadership programmes, at IMD in Switzerland, which we started in 2010 to ensure
                               that our future leadership cadre has a shared understanding of management                                               — indirect investment in property, which includes our investments in Sonae Sierra
                               challenges in the Grosvenor context. In the UK, an operational restructuring has                                          and our co–investments in Grosvenor–managed funds; and
                               given many people new career opportunities and reminded everyone around the
                                                                                                                                                       — our property fund management business.
                               Group of the scope for developing people professionally and personally.
                               Progress on our environmental performance is also an important strategic                                                 Grosvenor Group
                               objective. Having conducted our third carbon footprint assessment, we have
                               agreed emissions targets internally and are reporting on our performance for
                               the first time in a sister document to this Annual Report (see highlights, page 6,                                        Grosvenor Fund               Investment and                  Indirect investments
                               and download from www.grosvenor.com). This is a significant step, reflecting                                               Management                   development
                               a profound change over the last few years in the way we see our responsibilities                                                                      operating companies
                               to the environment in our working lives.
                               We plan to grow Grosvenor Fund Management. Our aim is to create value for                                                — UK                         — Grosvenor Britain & Ireland   — Sonae Sierra
                               investors, our Shareholders and our staff, and we have new leadership in this part                                       — USA                        — Grosvenor Americas            — Co-investments stakes in
                               of our Group which is invigorating for everyone. We believe that Grosvenor’s                                             — Continental Europe         — Grosvenor Asia Pacific           Grosvenor-managed funds
                                                                                                                                                        — Asia                       — Grosvenor Australia           — Other
                               stability, track record and long–term perspective give us a significant competitive
                               advantage in looking after third–party capital invested in property, particularly
                               at a time of upheaval in the property fund management industry.
                                                                                                                                                       The outlook
                               Following a careful search for a successor to Stuart Beevor as Grosvenor Fund                                           2010 was somewhat better than had been expected in terms of property returns,
                               Management’s Chief Executive, we appointed Jeffrey Weingarten with effect from                                          thanks to a recovery in values and we will do well to repeat these returns in 2011.
                               17 March 2011, simultaneously appointing James Raynor as Chief Investment Officer                                        There are headwinds both in the developed world (high levels of public debt,
                               and Robert Davis as Chief Operating Officer. I look forward to working with Jeffrey                                      with associated austerity measures, and private debt, with associated consumer
                               and to the business benefiting from his very considerable experience in the fund                                         spending implications) and in the developing world (inflation and currency
                               management industry. He knows us well already, from his period as a consultant                                          concerns). We will treat this uncertain time as a further opportunity for re–investing
                               to the business and then, briefly, as its Non–Executive Chairman, and hence offers                                       some of our financial capacity to implement our strategy, with appropriate attention
                               continuity in the safeguarding of our investors’ interests and the reputation of                                        to risk management. Property’s characteristics as a tangible asset with an attractive
                               the Group.                                                                                                              income return do put it in favour with investors from around the world. The
                               Stuart made a very important contribution to the Group by leading our fund                                              combination of our long–term perspective, property skills and knowledge of local
                               management activities over the last nine years, establishing Grosvenor Fund                                             property markets, provides the tools to capitalise on this.
                               Management as a separate entity, guiding it through the difficult market conditions                                      Among the other consequences of the upheaval of the last three years were an
                               and developing it into the significant business it is today. We wish him well and         Grosvenor starts 2011          increase in regulation, a change in investors’ approach to governance and
                               will miss his wisdom and straightforward approach.                                       in robust financial health,     constrained availability of debt from conventional sources. While individually
                               Increasing our exposure to Asia is a long–term priority. China is now the world’s        with a clear strategy          important, it is the collective impact of these trends that will shape the future
                               second largest economy and the gap between it and the USA is narrowing. We               and with the continuing        of the property industry and particularly property fund management. From the
                               responded to this with two important strategic decisions: in 2010, we resolved to        commitment of our              perspective of both a conservatively–geared investor and a long–term manager of
                               allocate additional capital to bring the weighting to Grosvenor Asia Pacific up to        shareholders.                  third–party funds, we view much of this as positive; we welcome the return of the
                               9.1% and we opened an office in Beijing — our second on the mainland.                                                    supremacy of the property specialist, this role having been usurped by the power
                                                                                                                                                       of financial ‘engineering’ in recent times.
                               Re–investing in our London estate remains a key priority of the Group. In the
                               historic core of our proprietary business — Mayfair and Belgravia — we are offering                                     Conclusion
                               a range of property to the market while enhancing the public realm, improving                                           I would like to thank Lord Home for the experience and wisdom he brought to
we have modified the           community retail and seeking to provide a high level of service to occupiers. In 2010,                                  the Board’s discussions in his period as Chairman, and for the sound advice which
Group’s structure to reflect    we also acquired a number of new development sites, particularly in the residential                                     he gave to me. I very much look forward to working closely with Lesley Knox as our
more accurately our current    sector, to further rejuvenate key locations.                                                                            new Chairman — and indeed with the Chief Executives of the Operating Companies
areas of activity.             The shape of the Group
                                                                                                                                                       via the Group Executive Committee.
                               With a return to somewhat calmer conditions, it has been possible to focus more on                                      Grosvenor starts 2011 in robust financial health, with a clear strategy and with
                               reshaping the Group for the future.                                                                                     the continuing commitment of our Shareholders. Every bit as important is the
                                                                                                                                                       dedication of 547 people in our 18 offices around the world. My thanks go to
                               The maturing of the Group is noted by Lesley Knox, in her Chairman’s statement, in                                      them for their loyal service.
                               the context of our decision to change the composition of the Board. As of 1 January
                               2011, we have modified the Group’s structure to reflect more accurately our current                                       Mark Preston Group Chief Executive
                               areas of activity and to facilitate implementation of our strategy.                                                     17 March 2011
                               The key change concerns the management of our indirect investments in property
                               which used to be carried out through our Operating Companies. Two years ago, as
                               part of the reorganisation of our activities in Continental Europe, the Holding
                               Company assumed direct responsibility for managing our investment in Sonae
                               Sierra. It has now also assumed direct responsibility for Grosvenor’s co–investment
                                                                                                                    Grosvenor Annual Report 2010   Finance Director’s report                                                         17
                                                                                                                    www.grosvenor.com



                                                                                                                    FInAncE                        In 2010, Grosvenor largely completed
                                                                                                                    DIREcTOR’s                     the stoking of its financial capacity for
                                                                                                                    REpORT                         the medium-term and started acquiring




                                                                                                                                                                                                                                            Group
                                                                                                                                                   development sites for the next cycle.
                                                                                                                                                   We took steps to improve both operational
                                                                                                                    nicholas scarles
                                                                                                                                                   and financial efficiency, with the expectation
                                                                                                                    Group Finance Director         of greater efficiency in 2011.

                                                                                                                                                   2010 performance
                                                                                                                                                   I am pleased to report a profit before tax for 2010 of £394.8m (2009: £235.8m
                                                                                                                                                   loss). Total return was 10.9% (2009: negative 2.8%), a recovery of almost twice
                                                                                                                                                   the negative returns of the two years of global financial crisis. Revenue profit, our
                                                                                                                                                   measure of underlying performance, was up 3.2% at £64.2m (2009: £62.2m).
                                                                                                                                                   At 31 December 2010, Grosvenor’s Shareholders’ funds were £2.65bn (2009: £2.39bn).

                                                                                                                                                   Earnings
                                                                                                                                                   Within revenue profit (see Note 4), which includes Grosvenor’s share of joint
                                                                                                                                                   ventures, gross rental income fell 10.7% to £284.0m (2009: £318.1m), as a result
                                                                                                                                                   of the asset sales in 2009 and 2010, mainly in Britain and Ireland, the Americas
                                                                                                                                                   and Australia. Fees and other income increased 34.7% to £72.6m (2009: £53.9m),
                                                                                                                                                   largely due to performance fees in Grosvenor Fund Management. Net financing
                                                                                                                                                   costs fell 9.5% to £87.7m (2009: £96.9m), reflecting asset sales but also a reduction
                                                                                                                                                   in the grossing up of debt and cash.
                                                                                                                                                   Overheads reduced by £0.6m to £123.2m. This reflects cost savings from efficiency
                                                                                                                                                   and service improvement programmes but also incorporates higher incentive
                                                                                                                                                   awards as a result of the improvement in performance.
                                                                                                                                                   Significant increases in revenue profit were delivered by Grosvenor Asia Pacific,
                                                                                                                                                   with revenue profit at £8.0m (2009: £8.9m loss), principally due to sales at The
                                                                                                                                                   Westminster Terrace, Hong Kong, and Grosvenor Fund Management at £12.5m
                                                                                                                                                   (2009: £4.1m loss), resulting from performance fees arising from benchmark
                                                                                                                                                   outperformance of its funds over several years. Grosvenor Americas experienced
                                                                                                                                                   a fall in revenue profit to £9.0m (2009: £18.9m), arising from lower levels of trading
                                                                                                                                                   activity in the year, while Grosvenor Australia’s revenue profit declined to £8.0m
                                                                                                                                                   (2009: £15.3m), due to lower development activity.
                                                                                                                                                   Grosvenor Britain & Ireland delivered the highest total return of 16.0% (2009:
                                                                                                                                                   1.8%), arising principally from value appreciation on the London estate. Grosvenor
                                                                                                                                                   Continental Europe contributed the lowest regional Operating Company return,
                                                                                                                                                   at 3.1%, reflecting market challenges in Continental Europe, tempered by Sonae
                                                                                                                                                   Sierra’s strong performance in Brazil.

                                                                                                                                                   Operational activity
                                                                                                                    Total return was 10.9%         Assets under management increased to £10.9bn (2009: £10.2bn), chiefly due
                                                                                                                    (2009: negative 2.8%), a       to the impact of revaluations during the year; property purchases and additions
                                                                                                                    recovery of almost twice       to support the development pipeline were largely offset by sales and completions
                                                                                                                    the negative returns of        of developments. Strengthening of currencies against Sterling resulted in an
                                                                                                                                                   increase of £0.2bn.
                                                                                                                    the two years of global
                                                                                                                    financial crisis.              Grosvenor’s share of property assets increased in value by 4.6% to £5.4bn
                                                                                                                                                   (2009: £5.2bn), principally due to the revaluations during the year.
                                                                                                                                                   The ‘Fast Forward’ project in Grosvenor Britain & Ireland (see page 28) continued,
                                                                                                                                                   being the main driver of a fall in staff numbers Group–wide, excluding Sonae Sierra,
                                                                                                                                                   of 2.7% to 547 (2009: 562).

                                                                                                                                                   Portfolio allocation
                                                                                                                                                   In 2010, Grosvenor reviewed its approach to capital allocation. The conclusion was
                                                                                                                                                   two refinements. First, co–investment stakes in Grosvenor–managed funds should
07:30 hours Arc de Triomphe, paris, France                                                                                                         be managed by the Holding Company rather than the Operating Companies (see
We completed or exchanged on nine acquisitions in France, financed by four loan facilities from three relationship                                  Chief Executive's review, page 12). Regional Operating Companies will therefore
banks
                                                                                                                                                   become wholly responsible for the performance of all the capital allocated to them.
                                                                                                                                                   Second, while capital will continue to be allocated to regional Operating Companies,
                                                                                                                                                   it should be allocated by reference to cities, consistent with the Grosvenor strategy.
Grosvenor Annual Report 2010                               Finance Director’s report                                                           18     Grosvenor Annual Report 2010   Finance Director’s report                                                           19
www.grosvenor.com                                                                                                                                     www.grosvenor.com



Economic property interests
                                                           The Holding Company's capital allocation oversight will consequently include both                                         for debt to attach to the property, moving with the property from owner to owner,
by country                                                 capital allocated to the regional Operating Companies (which directly invest in cities                                    without the need for refinancing and with fixed interest costs throughout. I see no
                                                           in their region) and any indirect investments — principally co–investment stakes in                                       reason why the UK should not adopt the better, in this case, American way. In any
                                                           Grosvenor Fund Management funds.                                                                                          case, the likely outcome to the wall of refinancing is a blend of existing lenders
                                                                                                                                                                                     becoming forced re–lenders, new groups of lenders entering the market, and the




                                                                                                                                                                                                                                                                                 Group
                                                           The table to the left shows Grosvenor's economic exposure to property by country.          There is no doubt that the     evolution of the way debt financing operates, each taking advantage of the most
                                                           The principal movements reflect the relative returns of the regions during the year         recent financial crisis and    enduring and consistent currency available — time.
                                                           as well as, in particular, the acquisition of the PCCW Tower investment in Hong Kong       the regulatory response will
                                                           (see the Grosvenor Asia Pacific report, page 50).                                           have a lasting impact on the   For Grosvenor the focus remains, at all times in the cycle and regardless of the state
                                                                                                                                                                                     of the funding markets, finding properties from which, with our patient and persistent
                                                           Grosvenor’s diversification strategy is to invest, through its Operating Companies          way property markets are
                                                                                                                                                                                     effort, a good return can be earned. As such, our approach is to ensure we have
                                                           and indirect investments, in a spread of regions around the world. As a result total       financed.                      sufficient financing in place to take advantage of property opportunities which may
                                                           returns, in any one year, reflect the blend of property markets in which we operate.
                                                                                                                                                                                     arise. To this end, Grosvenor Britain & Ireland agreed to issue, post–year end, £125m
                                                           The result is greater stability of both returns and Shareholders funds, our ultimate
                                                                                                                                                                                     of debt in the US private placement market, split between 20– and 30–year maturities,
                                                           source of capital, which have remained within 10% of the 31 December 2010 level
                                       2009         2010                                                                                                                             assuring financing for its London estate strategy over the medium–term. This debt,
                                                           of £2.6bn (2009: £2.4bn) over each of the last four years.
                                                                                                                                                                                     at fixed interest rates of 5.57% for the 20–year term and 6.05% for the 30–year term,
     Grosvenor Britain & Ireland 47.2% 48.2%
                                                                                                                                                                                     provides significant protection against future interest rate rises and inflation.
     Grosvenor Americas               12.2% 13.0%          Financing
                                                           As part of our plans to maintain ample financial capacity to take advantage of
     Grosvenor Continental                                                                                                                                                           Regulatory reform
                                                           opportunities as they arise and then weather any double dip that might ensue,
     Europe                           29.3% 25.8%                                                                                                                                    Having endured the recent market and financial crisis, governments, regulators
                                                           Grosvenor financed or refinanced 16 of its debt facilities, with a value of £493m;
     Grosvenor Asia Pacific             5.9%         7.8%                                                                                                                             and market participants must ensure they extract value from subsequent reform.
                                                           £180m matured during the year.
                                                                                                                                                                                     Regulatory reform should be considered, rather than reactionary, and should
     Grosvenor Australia               5.4%         5.2%   At the end of the year, Grosvenor’s financial capacity, being the unrestricted cash and                                    address not only the flaws in the existing system but also the undesired
                                                           committed credit lines to which it has immediate access, was £829m (2009: 964m).                                          consequential impacts of reform.
 Grosvenor Britain & Ireland
 West End, London                     33.3% 34.8%
                                                           We will not use this financial capacity dramatically to acquire a large amount of                                          Reform of incentive structures, to reflect longer–term consequences, is highly
                                                           property in the expectation of an improving property cycle. Its purpose is to enable us,                                  desirable, as is protection against system–threatening risks. However, of particular
 Outside London                       12.6%     11.3%      first, to buy assets with which we can generate a return through deploying our property                                    concern is the European Union proposal that hedges used by real estate funds to
 London, other                         1.3%         2.1%   skills, and, second, to withstand any ‘double dip’ which might subsequently arise.                                        fix interest costs on property loans should fall within the requirements for daily
                                                                                                                                                                                     cash margining. If implemented, the relatively stable and predictable cashflows
                                                           At the year end, the average maturity of Grosvenor’s wholly–owned drawn debt was           Regulatory reform should
 Grosvenor Americas                                                                                                                                                                  of property funds would become both erratic and unpredictable — factors likely
                                                           9.5 years (2009: 9.5 years) and un–drawn facilities 2.9 years (2009: 1.9 years).
 USA                                   8.1%         8.9%   Wholly–owned spare cash of £239m was sufficient to repay all wholly–owned debt
                                                                                                                                                      be considered, rather than     to exacerbate the next property market crash.
                                                           maturing over the next four years.                                                         reactionary, and should
 Canada                                4.1%         4.1%
                                                                                                                                                      address not only the flaws     Beyond the crisis and reform
 Grosvenor Continental Europe*
                                                           Holding such significant financial capacity is costly, both in terms of back–up facility     in the existing system         Beyond the period of bank debt indigestion and regulatory reform, we expect
                                                           commitment fees and the 'gross–up' costs of borrowing funds which are then placed          but also the undesired         a changed property market. The investor base will comprise a greater proportion
 Portugal                              11.1%        9.5%   on deposit, especially where deposit rates are artificially low. The benefits of                                            of Asian quasi–governmental organisations; they will seek to invest with those
                                                                                                                                                      consequential impacts
                                                           maintaining this capacity — the potential short– and medium–term opportunities                                            who have property skills, who are both aligned in terms of performance and have
 Spain                                 6.8%         5.9%
                                                           which Grosvenor is able to exploit — outweigh this temporary cost.                         of reform.                     a medium–term perspective. Investment structures will be less complex, with
 Brazil                                2.6%         3.2%                                                                                                                             investors and lenders keen to understand risks within legal structures and wanting
 Italy                                 2.3%         2.4%   Treasury activity                                                                                                         to have greater influence over asset decisions. Loan–to–value ratios will, for a few
 Germany                               3.2%         2.1%   As well as ensuring Grosvenor’s own financial liquidity, Grosvenor also manages                                            years at least, be lower, with bank debt forming a smaller share, and capital market
                                                           debt financing on behalf of its Operating Company joint ventures and Grosvenor–                                            solutions increasingly important. Much emphasis will be placed on solving the riddle,
 France                                1.9%         1.8%   managed funds. In total, Grosvenor manages £3.7bn of loans, comprising 107                                                the solution to which has eluded property investors for generations — how to make
 Romania                               0.6%         0.5%   facilities, in eight currencies with 39 lenders, and in support of this £1.4bn notional                                   the illiquid asset which is property, liquid.
 Greece                                0.8%         0.4%   principal of derivatives (principally interest rate hedges). 36 financings and
                                                                                                                                                                                     Grosvenor’s approach is well suited to this future environment. At Grosvenor’s
                                                           refinancings were undertaken during the year, with a value of £1.1bn. £434m
                                                                                                                                                                                     core are local property skills, diversified by geography but not ethos, with prudent
 Grosvenor Asia Pacific                                     of facilities mature in 2011.
                                                                                                                                                                                     financing in understandable structures, and alignment with our investor and lender
 Hong Kong                             0.5%         4.0%                                                                                                                             partners for the long–term.
                                                           The future of debt funding
 Japan                                 2.7%         2.8%   There is no doubt that the recent financial crisis and the regulatory response will
                                                                                                                                                                                     Risk management
 China                                 2.7%         1.0%   have a lasting impact on the way property markets are financed. In the near term
                                                                                                                                                                                     In anticipation of the new cycle, we continue to improve how we assess and monitor
                                                           is the challenge of refinancing the enormous levels of property debt which exist
                                                                                                                                                                                     the operational and financial risk arising from developments and joint ventures.
 Grosvenor Australia                                       in the USA and Europe and which mature over the next few years. The main lenders,
                                                                                                                                                                                     The cross–Operating Company development group has devised and introduced
                                                           Western banks and CMBS investors, are unable to provide replacement finance.
 Queensland                            4.0%         4.3%                                                                                                                             a risk assessment model to identify, communicate and manage development
                                                           Most fear, while some wish for, an almighty property market crunch, with distressed
                                                                                                                                                                                     risks, and Grosvenor Operating Companies are now able to draw on the skills of
 New South Wales                       1.4%         0.9%   sales causing a double dip in the markets, and opportunity investors reaping
                                                                                                                                                                                     Grosvenor’s new in–house Legal Counsel, Ulrike Schwarz–Runer, located within
*Grosvenor’s share of assets held by Sonae Sierra          bargains. A double dip is unlikely to happen for this reason: existing lenders
                                                                                                                                                                                     Grosvenor Britain & Ireland.
 is included within Continental Europe regardless          recognise that forced sellers rarely achieve best value — and eager, well–financed
 of the Brazilian component.                               investors are too numerous. A double dip is more likely to happen when a fragile
                                                                                                                                                                                     Conclusion
                                                           real economy is faced with rising interest rates, with retail shoppers reigning in
                                                                                                                                                                                     Grosvenor’s approach remains the same — to deliver returns above our cost of
                                                           spending to fund increasing mortgage payments and businesses cutting back in
                                                                                                                                                                                     capital by efficiently deploying property skills in a portfolio of markets, facilitated by
                                                           the face of uncertain economic growth.
                                                                                                                                                                                     adequate financial capacity, all at an acceptable cost. We are now carefully deploying
                                                           Market structures will also evolve in response to the need for funding. In some                                           our people, our financial position and our international network in anticipation of the
                                                           countries, including the UK, the term of new property bank lending is shortening,                                         new cycle.
                                                           accelerating the refinancing treadmill and shortening the period for which
                                                           borrowers can easily fix their interest costs. In the UK debt ‘attaches’ to the                                            Nicholas Scarles Group Finance Director
                                                           borrower rather than the property, whereas in the US a common approach is                                                 17 March 2011
Grosvenor Annual Report 2010   Group Board of Directors and Executive committee            20   Grosvenor Annual Report 2010   Group Board of Directors and Executive committee                                                21
www.grosvenor.com                                                                               www.grosvenor.com



lesley Knox                    Robin Broadhurst                      Rod Kent                   GROsvEnOR                      Non–Executive Directors                              Jeremy Newsum FRICS is Executive Trustee
                                                                                                                                                                                    of the Grosvenor Estate. He was Group Chief
                                                                                                GROup                          Lesley Knox (Chairman) is a Trustee of the
                                                                                                                               Grosvenor Estate, Chairman of Alliance Trust
                                                                                                                                                                                    Executive from 1989 to 2008. He is a member
                                                                                                                                                                                    of the Council of Imperial College, a director
                                                                                                BOARD OF                       PLC and the Senior Non–Executive Director of
                                                                                                                               Hays plc. She qualified as a solicitor and then
                                                                                                                                                                                    of Grupo Lar and Chairman of the Urban




                                                                                                                                                                                                                                       Group
                                                                                                DIREcTORs
                                                                                                                                                                                    Land Institute.
                                                                                                                               spent 15 years with Kleinwort Benson (1981–
                                                                                                                               1996), first as a corporate finance director and       Domenico Siniscalco PH.D is Vice Chairman
                                                                                                As at 17 March 2011            then as Chief Executive of the institutional asset   of Morgan Stanley International and Country
                                                                                                                               management business. She moved to the British        Head for Italy, and Chairman of Assogestioni
                                                                                                                               Linen Bank (1997–1999), latterly as Governor,        (association of Italian asset managers).
Alasdair morrison              Jeremy newsum                         Domenico siniscalco                                       and then was a founder director of British Linen     From 2001 to 2005, he served in the Italian
                                                                                                                               Advisers (2000–2003). She has held a variety of      government as Director General of the
                                                                                                                               non–executive directorships with international       Treasury and then Minister of Finance.
                                                                                                                               and British corporates, and is involved with arts    He has been a Professor of Economics
                                                                                                                               and charitable organisations.                        at Torino University since 1990 and has
                                                                                                                                                                                    a Ph.D. in Economics from Cambridge.
                                                                                                                               Robin Broadhurst CVO CBE FRICS is a Trustee
                                                                                                                               of the Grosvenor Estate, Chairman of Grainger        Executive Directors
                                                                                                                               plc and Sableknight Ltd, and a Non–Executive
                                                                                                                               Director of the British Library and Chelsfield        Mark Preston MRICS (Group Chief Executive)
mark preston                   nicholas scarles                                                                                Partners. He is also consultant to Sir Robert        joined Grosvenor in the UK 1989. Seconded to
                                                                                                                               McAlpine.                                            Hong Kong in 1995, he returned to lead our
                                                                                                                                                                                    fund management operations in 1997, spent
                                                                                                                               Rod Kent is a Governor of The Wellcome Trust.        four years in San Francisco from 2002, became
                                                                                                                               He was Chairman of BT Pension Scheme                 Chief Executive of Grosvenor Britain & Ireland
                                                                                                                               Trustees Limited from 2008 to 2011, Senior           in 2006 and Group Chief Executive in 2008.
                                                                                                                               Independent Director at Whitbread PLC from           He is on the Board of the Association of Foreign
                                                                                                                               2002 to 2008 and Chairman of Bradford &              Investors in Real Estate and a member of the
                                                                                                                               Bingley plc from 2003 to 2008. He was                North West Business Leaders’ Team. He is a
                                                                                                                               Managing Director of Close Brothers Group plc        Non–Executive Director of Sonae Sierra SGPS.
                                                                                                                               from 1975 to 2002, and then a Non–Executive
                                                                                                                               Director and latterly Chairman until 2008.           Nicholas Scarles FCA CPA ATTORNEY AT LAW
                                                                                                                                                                                    (Group Finance Director) joined Grosvenor
                                                                                                                               Alasdair Morrison is a Senior Advisor to             in 2004. He was previously at Centrica,
                                                                                                                               Citigroup Asia Pacific, an Independent Non–           Price Waterhouse, and Coopers and Lybrand.
                                                                                                                               Executive Director of MTR Corporation Ltd, the       He is a Governor of the Haberdashers’ Elstree
                                                                                                                               Hong Kong Mercantile Exchange and Pacific             Schools, Member of the Court of Assistants
                                                                                                                               Basin Shipping Limited. From 2000 to 2007, he        of the Haberdashers Livery Company and a
                                                                                                                               was Chairman of Morgan Stanley Asia, based in        Non–Executive Director of Sonae Sierra SGPS.
                                                                                                                               Hong Kong. From 2002 to February 2006, he
                                                                                                                               was concurrently Chairman and Chief Executive
                                                                                                                               Officer of Morgan Stanley Asia. Prior to joining
                                                                                                                               Morgan Stanley, he worked in Asia for 28 years
                                                                                                                               for the Jardine Matheson Group, where he was
                                                                                                                               the Group Managing Director from 1994 to 2000.




Andrew Bibby                   Rob Kerr                              nicholas loup              GROsvEnOR                      Mark Preston (Chairman), as above.                   Peter Vernon MRICS (Chief Executive,
                                                                                                                                                                                    Grosvenor Britain & Ireland) joined Grosvenor
                                                                                                GROup                          Nicholas Scarles, as above.                          in 2005 to take responsibility for Grosvenor’s
                                                                                                                                                                                    direct and indirect property investments in
                                                                                                ExEcuTIvE                      Andrew Bibby (Chief Executive, Grosvenor             the UK and Ireland, including Grosvenor’s

                                                                                                cOmmITTEE
                                                                                                                               Americas) joined Grosvenor in 1984. He is a          London estate and, from 2006, the London
                                                                                                                               past Director of the Real Property Association       development business. He is a member of the
                                                                                                As at 17 March 2011            of Canada and a past member of the Faculty           Royal & Sun Alliance London Regional Board
                                                                                                                               Advisory Board of the Sauder School of               and the Board of London First. Previously he
                                                                                                                               Business at the University of British Columbia.      was a Partner at IBM Business Consulting
                                                                                                                                                                                    Services and PwC Consulting.
peter vernon                   Jeffrey weingarten                                                                              Rob Kerr FRICS FAPI (Chief Executive, Grosvenor
                                                                                                                               Australia) joined Grosvenor in 1994. He is a         Jeffrey Weingarten (Chief Executive,
                                                                                                                               member of the Property Council of Australia          Grosvenor Fund Management) began his
                                                                                                                               Capital Markets Roundtable, Director of the          career as a securities analyst at Scheinman
                                                                                                                               Grosvenor ISPT International Property Trust          Hochstein & Trotta in 1970, before moving to
                                                                                                                               and a member of the Australian Institute of          Wertheim & Co. In 1977, he joined the research
                                                                                                                               Company Directors.                                   division at Goldman Sachs & Co in New York,
                                                                                                                                                                                    becoming Director of Research in London in
                                                                                                                               Nicholas Loup (Chief Executive, Grosvenor            1987 and general partner of Goldman Sachs
                                                                                                                               Asia Pacific) established the operation in            & Co in 1990. From 1991–1995 Jeffrey was
                                                                                                                               Asia Pacific in 1994. He is a Director of Asia        the Chief Investment Officer and Managing
                                                                                                                               Standard, a listed company in Hong Kong;             Director of Goldman Sachs Asset Management
                                                                                                                               a General Committee member of the British            International, before returning to International
                                                                                                                               Chamber of Commerce and a Director of the            Equity Research as Global Strategist. From
                                                                                                                               Spinal Cord Injury Fund. He is also Chairman         1998–2008, Jeffrey was General Partner
                                                                                                                               of ANREV, of which he is a founder member,           and Chief Investment Officer of Buttonwood
                                                                                                                               and a member of the Asia Pacific acquisitions         Capital Partners.
                                                                                                                               committee of the Tate.
                                                                                                                 Grosvenor Annual Report 2010   Investment and development – Grosvenor Britain & Ireland       23
                                                                                                                 www.grosvenor.com



                                                                                                                 GROsvEnOR                      Grosvenor Britain & Ireland’s aim is
                                                                                                                 BRITAIn                        constantly to improve the neighbourhoods
                                                                                                                 & IRElAnD                      of our London estate and to complement this
                                                                                                                                                elsewhere through value creation, with a
                                                                                                                                                particular focus on high-end residential and
                                                                                                                 peter vernon
                                                                                                                                                mixed-use. The end user – whether a resident,
                                                                                                                 Chief Executive                a business or a visitor – is always in our
                                                                                                                                                minds: meeting their needs for exceptional
                                                                                                                                                places in which to live and work is key to our
                                                                                                                                                long-term success.




                                                                                                                                                                                                                    Grosvenor Britain & Ireland
                                                                                                                                                                                                                    Investment and development
                                                                                                                                                We have actively managed the London estate
                                                                                                                                                since 1677; for the past 40 years we have also
                                                                                                                                                developed and managed assets elsewhere in
                                                                                                                                                the UK. Our business is run from our London
                                                                                                                                                office, opened in 1836. Our Edinburgh office
                                                                                                                                                opened in 1987.
                                                                                                                                                Our Chief Executive, Peter Vernon, who joined
                                                                                                                                                Grosvenor in 2005, leads a team of 245 people
                                                                                                                                                across two business units: the London estate,
                                                                                                                                                responsible for our Belgravia and Mayfair
                                                                                                                                                assets, and Grosvenor Developments,
                                                                                                                                                responsible for all off-estate activity.




                                                                                                                 highlights                     number of assets at each property location
                                                                                                                 Grosvenor Britain & Ireland    Grosvenor Britain & Ireland



                                                                                                                 16.0%
                                                                                                                                                 Britain
                                                                                                                                                  A Cambridge    2                           C    B

                                                                                                                                                  B Edinburgh    3
                                                                                                                 Total return
                                                                                                                                                  C Glasgow       1
                                                                                                                 2009 1.8%



                                                                                                                 £16.0m
                                                                                                                                                 D Liverpool      1

                                                                                                                                                  E London      716

                                                                                                                                                 Ireland
                                                                                                                 Revenue profit                    F Dublin       2             F                      D
                                                                                                                 2009 £13.3m




09:15 hours Bankside, london, England
                                                                                                                                                                                                           A
Our projects in London include schemes outside our Mayfair and Belgravia estate, notably the luxury apartments
at NEO Bankside, by Tate Modern on the Thames, the first phase of which is nearing completion.
                                                                                                                                                                                                           E
Grosvenor Annual Report 2010           Investment and development – Grosvenor Britain & Ireland                           24     Grosvenor Annual Report 2010                                                                         Investment and development – Grosvenor Britain & Ireland                                                                    25
www.grosvenor.com                                                                                                                www.grosvenor.com


Grosvenor’s share of property assets   This was a good year for Grosvenor           to suit today’s businesses. Sensitive
                                       Britain & Ireland, despite a challenging     redevelopment is also a proven part
By sector £m                           economy. We achieved our priorities          of maintaining the vitality of the estate.
                                       for 2010 — to increase our profit before      Experience shows that improvements
                                       tax, which rose to £326.2m (2009:            in the fabric, which differentiate it
                                       £15.0m loss); to continue adding to our      from other parts of the city, increase
                                       development ‘pipeline’, which we will        demand from occupiers and grow rental
                                       exploit at the right time; and to improve    income.
                                       the operational management of our
                                                                                    We look out for the changes in what
                                       core portfolio, to boost net income.
                                                                                    people need from the places in which
                                                                                    they live, work or relax, and we are
                                       Key performance indicators
                                                                                    never complacent about knowing
                                       Our total return was 16.0% (2009:
                                                                                    our ‘back yard’. We constantly refresh
                                       1.8%), a good performance relative
                                                                                    our properties and the mix of them that




                                                                                                                                                                                                                                                                                                                                                                           Grosvenor Britain & Ireland
                                                                                                                                                                                                                                                                                                                                                                           Investment and development
   O ce                                to the IPD all property index, given our
                                                                                    we offer in different locations. We seek
   £697.0m                  28.4%      40% exposure to residential property.
                                                                                    to improve the public realm and help
   Retail                              Revenue profit increased to £16.0m            create desirable places for people by
   £766.0m                  31.3%      (2009: £13.3m).                              collaborating with other stakeholders
   Residential                                                                      to solve common problems. We work
   £986.2m                  40.3%      Assets under management (excluding
                                                                                    hard to address the day–to–day               Elizabeth Street, Belgravia
                                       our investment in Grosvenor funds)




                                                                                                                                                                                                                                                                                                                           EC
                                                                                    concerns of our customers: the recent




                                                                                                                                                                                                                                                                                                                             CL
                                                                                                                                                                                                                                                                                                                               ES
                                       grew to £3.5bn, up 9.9% (2009: £3.2bn).                                                                                                                                                                                                                                     RD




                                                                                                                                                                                                                                                                                                                                 TO
By region £m                                                                                                                     City:                            London                                                              We held a party for residents and retailers                               ’S
                                                                                    reorganisation of our London estate




                                                                                                                                                                                                                                                                                                                                   N
                                                                                                                                                                                                                                                                                                              NG




                                                                                                                                                                                                                                                                                                                                         ST
                                                                                                                                                                                                                                                                                                            KI
                                       This reflects revaluation gains in all                                                     Country:                         England                                                             to mark the completion of the public realm
                                                                                    team gives them a single point




                                                                                                                                                                                                                                                                                                                                  SQ
                                                                                                                                                                                                                                                                                                        EL
                                       sectors on the London estate as well                                                                                                                                                           works in this important part of Belgravia,                          IZA




                                                                                                                                                                                                                                                                                                                               R
                                                                                                                                                                                                                                                                                                                             TE
                                                                                                                                                                                                                                                                                                             BE
                                                                                    of contact and ensures our staff have        Sector:                          Retail and residential




                                                                                                                                                                                                                                                                                                                           ES
                                                                                                                                                                                                                                                                                                               TH
                                                                                                                                                                                                                                      which sets a new standard for high–end




                                                                                                                                                                                                                                                                                                                         CH
                                                                                                                                                                                                                                                                                                                                                          ECC
                                       as our value–adding active management                                                                                                                                                                                                                                        ST                                       LES
                                                                                                                                                                                                                                                                                                                                                                TON
                                                                                    clear responsibility for managing                                                                                                                 retail streets.                                         TE   SE




                                                                                                                                                                                                                                                                                                                                             T
                                                                                                                                 Type:                            Investment




                                                                                                                                                                                                                                                                                                                                           YS
                                                                                                                                                                                                                                                                                                                                                                      BR
                                       of the portfolio.                                                                                                                                                                                                                                    GA       AT




                                                                                                                                                                                                                                                                                                                                         UR
                                                                                                                                                                                                                                                                                        N              ON
                                                                                    individual relationships.                                                                                                                                                                         TO




                                                                                                                                                                                                                                                                                                                                       EB
                                                                                                                                                                                                                                                                                                            PL
                                                                                                                                 Area:                            18,600m2                                                                                                          EA

                                       The market in 2010                           At the beginning of 2011 we agreed to        Ownership:                       The Grosvenor Trusts                                                                                                               EA
                                                                                                                                                                                                                                                                                                                                         ELI
                                                                                                                                                                                                                                                                                                                                            ZAB
                                                                                                                                                                                                                                                                                                                                               ETH
                                                                                                                                                                                                                                                                                                       TO
                                       2010 was another year of unusually           issue £125m of debt in the US private                                                                                                                                                                                N
                                                                                                                                                                                                                                                                                                             TE
                                                                                                                                                                                                                                                                                                               RR
                                                                                                                                                                                                                                                                                                                                                     ST
                                                                                                                                                                                                                                                                                                                         SE
                                       high uncertainty. There was better than      placement market, assuring financing                                                                                                                                                                                                    ML
                                                                                                                                                                                                                                                                                                                             EY
                                                                                                                                                                                                                                                                                                                                  PL
                                       expected growth in the UK economy            for our London estate strategy over the
                                       in the second and third quarters, but        medium–term (see Finance Director's
                                       this was not sustained to the year end.      report, page 16).
                                       Outside London this uncertainty meant
   London, West End                                                                 Grosvenor Developments
                                       limited growth in the property market.
   £1,876.6m                76.6%      However, in central London there
                                                                                    Up to 10% of the net assets of               3–10 Grosvenor Crescent,
   Outside London                                                                   Grosvenor Britain & Ireland are invested     Belgravia
                                       was continued foreign demand for all
   £572.6m                  23.4%      prime assets, giving significant capital
                                                                                    in Grosvenor Developments. This
                                                                                                                                 City:                            London
                                                                                    business focuses on projects outside the
                                       appreciation to commercial properties                                                     Country:                         England
By activity £m                                                                      London estate which can be completed
                                       in particular; residential values, despite
                                                                                    relatively quickly or which are readily      Sector:                          Residential
                                       international interest, stayed relatively
                                                                                    phased, allowing us to recycle capital       Type:                            Development
                                       flat in real terms, with growth at 3.8%.
                                                                                    more efficiently and therefore                Area:                            7,400m2
                                       The IPD all property index return for the
                                                                                    profitably, boosting our total return.
                                       year was 15.2%.                                                                           Ownership:                       Freehold owned by
                                                                                    We play to our strengths. Our sectoral                                        the Grosvenor Trusts
                                       Strategy                                     emphasis is on prime residential in
                                                                                                                                 Combining timeless elegance with the
                                       Our strategy is straightforward: to use      central London, where the market is          highest standards in design and materials,
                                       our expertise in creating inspiring urban    international. We are opportunistic          this Grade II* scheme comprises 15 luxury
                                       places to meet the requirements of our       and seek a higher return in other            properties with underground parking
                                       residential, retail and office customers      sectors where we have a competitive          for 22 cars. The first apartments will
                                       and deliver value and income for             advantage, such as retail and mixed–         be available from the summer of 2011.
   Investment                          Grosvenor and our investor partners.         use schemes. We favour urban locations       This is a computer–generated image.
   £2,174.6m                88.8%      Our focus is on increasing revenues          which we know well and where the
   Development                         from our London estate and generating        economy and demographic profile suit                           HYDE PARK
   £274.6m                  11.2%      trading profits from our prime residential    our track record in high–quality
                                                                                                                                                              DR
                                       development business elsewhere.              property.                                                 SOUTH C
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                                       London estate                                While this side of our business gives                                    E GRE
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                                       Our London estate will always be our         priority to trading profits, it is imbued                                                                          NT
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                                       core investment: we believe energetic        with the same belief in judging                                                                               ES
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                                       and imaginative stewardship of our           performance over the long–term that                                                                                              OS
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                                       historic portfolio will ensure long–term     we apply to the London estate.                                                                                       IN
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                                       income, capital appreciation and             Our success as developers depends                                       CR
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                                       sustainability.                              on creating long–lasting assets, and                           WI
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                                                                                    maintaining trusting relationships with                                                   ES
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                                       We reinvest constantly in Mayfair and                                                                                                AV
                                                                                    local communities and public and                     B
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                                       Belgravia to create very high–quality                                                           OM                              BE
                                                                                    private organisations over many years.         MO
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                                       residential properties, outstanding
                                       retail streets and offices tailor–made
Grosvenor Annual Report 2010                                                             Investment and development – Grosvenor Britain & Ireland                                                                                                                        26           Grosvenor Annual Report 2010   Investment and development – Grosvenor Britain & Ireland                        27
www.grosvenor.com                                                                                                                                                                                                                                                                     www.grosvenor.com


                                                                                                                                                                                                                                                                                                                     Investment in funds                         We started construction of Duke Street
8 Balderton Street, Mayfair                                                              Campden Hill, Holland Park                                                               40–54 Grosvenor Hill, Mayfair                                                                                                      We co–invest in Grosvenor–managed           in December and will start on Balderton
City:                            London                                                  City:                  London                                                            City:                                 London                                                                                       funds in the UK. We continue to provide     Street and Davies Street this year.
                                                                                                                                                                                                                                                                                                                     development expertise to Grosvenor          Work also began on projects at 30 North
Country:                         England                                                 Country:               England                                                           Country:                              England
                                                                                                                                                                                                                                                                                                                     Fund Management in the region.              Audley Street and at 40–54 Grosvenor
Sector:                          Hotel                                                   Sector:                Residential                                                       Sector:                               Offices                                                                                                                                   Hill (see opposite), in August and
Type:                            Development                                             Type:                  Development                                                       Type:                                 Development                                                                                  Property highlights                         September respectively.
Area:                            5,800m2                                                 Area:                  18,000m2                                                          Area:                                 2,800m2                                                                                      Following limited investment activity
                                                                                                                                                                                                                                                                                                                                                                 Customer service remains a top priority.
Ownership:                       Wholly owned                                            Ownership:             Held in joint venture                                             Ownership:                            Wholly owned                                                                                 in the last few years, we began this
                                                                                                                                                                                                                                                                                                                                                                 Our London estate service desk handled
                                                                                                                                                                                                                                                                                                                     year to reinvest on the London estate,
We are converting this Art Deco building                                                 Our revised scheme for this two–acre site                                                In an historic setting at the heart of Mayfair,                                                                                                                                31,000 enquiries (2009: 28,000).
                                                                                                                                                                                                                                                                                                                     in particular in assets which could be
into a luxury boutique hotel. It will comprise                                           in a fashionable part of West London now                                                 40–54 Grosvenor Hill is a ‘next generation’                                                                                                                                    But the real test is what tenants and
                                                                                                                                                                                                                                                                                                                     added to our development pipeline in
75 bedrooms and suites as well as a                                                      provides for fewer, larger luxury apartments                                             office scheme using ground source energy                                                                                                                                        occupiers say about us. Our latest MORI
                                                                                                                                                                                                                                                                                                                     order to increase income in future years.
restaurant, bar and spa. One of the bedrooms                                             with better use of space and improved views                                              to heat and cool the building. Comprising                                                                                                                                      survey showed that their willingness
will be inside a sculpture, forming part of the                                          of the Park.                                                                             five floors of contemporary office space,                                                                                             We began 2010 with one project under        to recommend us unprompted had




                                                                                                                                                                                                                                                                                                                                                                                                             Grosvenor Britain & Ireland
                                                                                                                                                                                                                                                                                                                                                                                                             Investment and development
structure, by the internationally–acclaimed                                                                                                                                       it is due for completion in Spring 2012                                                                                            construction and ended it with five,         improved again, from 68% to 70%.
artist Anthony Gormley. The scheme is due                                                This is a computer–generated image.                                                      and will be one of the very few new–build
for completion in the third quarter of 2012.                                                                                                                                      offices to come onto the market at that time.
                                                                                                                                                                                                                                                                                                                     reflecting our confidence that the market
                                                                                                                                                                                                                                                                                                                                                                 Developments elsewhere
                                                                                                                                                                                                                                                                                                                     for prime central London property will
This is a computer–generated image.                                                                                                                                               This is a computer–generated image.                                                                                                                                            We have several other exciting projects,
                                                                                                                                                                                                                                                                                                                     continue to improve. We also obtained
                                                                                                                                                                                                                                                                                                                                                                 all within the prime residential sector.
                                                                                                                                                                                                                                                                                                                     a number of planning consents on
                                                                                                                                                                                                                                                                                                                     projects in our development pipeline,       In December, we completed the
                                                                                                                                                                                                                                                                                                                     which we will progress in 2011.             first phase of our largest project,
                                                                                                                                                                                                                                                                                                                                                                 the apartments at NEO Bankside
                                                                                                                                                                                                                                                                                                                     At the end of 2010, our development
                                                                                                                                                                                                                                                                                                                                                                 on the Thames (see pages 22 and 29),
                                                                                                                                                                                                                                                                                                                     ratio increased to 18.2%.
                                                                                                                                                                                                                                                                                                                                                                 undertaken with Native Land, and
                                                                                                                                                                                                                                                                                                                     London estate                               we committed to the second phase
                                                                                                                                                                                                                                                                                                                     We completed the first two public realm      of development. By the end of 2010, we
                                                                                                                                                                                                                                                                                                                     projects under our innovative funding       had achieved total pre–sales of £124m.
                                                                                                                                                                                                                                                                                                                     partnership with Westminster City           Many of these resulted from successful
                                                                                                                                                                                                                                                                                                                     Council — Elizabeth Street (see page 25)    marketing campaigns overseas,
                                                                                                                                                                                                                                                                                                                     in September and Mount Street               especially in Asia, reflecting the
                                                                                                                                                                                                                                                                                                                     (see front cover) — just after the year     international appeal of the scheme.
                                                                                                                                                                                                                                                                                                                     end. Residential and retail tenants
                                                                                                                                                                                                                                                                                                                                                                 We also completed the purchase of
                                                                                                                                                                                                                                                                                                                     have expressed their delight at the
                                                                                                                                                                                                                                                                                                                                                                 our site at Campden Hill in Holland
                                                                                                                                                                                                                                                                                                                     outcome after the sometimes tortuous
                                                                                                                                                                                                                                                                                                                                                                 Park(see opposite). Once a revised
                                                                                                                                                                                                                                                                                                                     construction process, which at Mount
                                                                                                                                                                                                                                                                                                                                                                 planning consent and vacant possession
                                                                                                                                                                                                                                                                                                                     Street unexpectedly involved significant
                                                                                                                                                                                                                                                                                                                                                                 is received, development of the site,
                                                                                                                                                                                                                                                                                                                     infrastructure works. Feedback from
                                                                                                                                                                                                                                                                                                                                                                 with our partners Native Land, will
                                                                                                                                                                                                                                                                                                                     visitors was also positive, reflecting the
                                                                                                                                                                                                                                                                                                                                                                 begin in 2013.
                                                                                                                                                                                                                                                                                                                     transformation of the environment for
                                                                                                                                                                                                                                                                                                                     our customers in these key locations.       In Cambridge, we acquired our
                                                                                                                                                                                                                                                                                                                                                                 Parkside Place residential development
                                                                                                                                                                                                                                                                                                                     In Belgravia, we were selected as both
                                                                                                                                                                                                                                                                                                                                                                 overlooking Parker’s Piece (see page 29).
                                                                                                                                                                                                                                                                                                                     project and development manager of
                                                                                                                                                                                                                                                                                                                     3–10 Grosvenor Crescent (see page 25)       In Edinburgh and Glasgow, we acquired
                                                                                                                                                                                                                                                                                                                     of which the Grosvenor Trusts hold the      the Grouss residential portfolio (see
                                                                                                                                                                                                                                                                                                                     freehold. We have invested £10m in          page 29) — an example of reacting
                                                                                                                                                                                                                                                                                                                     the project.                                swiftly to an opportunity from receivers
                                                                                                                                                                                                                                                                                                                                                                 regarding a market we know well, and
                                                                                                                                                                                                                                                                                                                     In Mayfair, we received three significant
                                                                                                                                                                                                                                                                                                                                                                 which involves managing an historic
                                                                                                                                                                                                                                                                                                                     planning consents: to develop 55–73
                                                                                                                                                                                                                                                                                                                                                                 portfolio. We have invested jointly with
                                                                                                                                                                                                                                                                                                                     Duke Street into an integrated retail
                                                                                                                                                                                                                                                                                                                                                                 the Universities Superannuation Scheme
                                                                                                                                                                                                                                                                                                                     and residential scheme; to convert the
                                                                                                                                                                                                                                                                                                                                                                 and we will act as asset manager.
                                                                                                                                                                                                                                                                                                                     Avis building at 8 Balderton Street
                                                                                                                    UE                                                                     EET
                                                                                                                                                                                                                                                                                                                     (see opposite) into a luxury hotel;
                                                                                                                AVEN                                                                  K STR
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Grosvenor Annual Report 2010   Investment and development – Grosvenor Britain & Ireland                          28     Grosvenor Annual Report 2010                                                                            Investment and development – Grosvenor Britain & Ireland                                                                                                        29
www.grosvenor.com                                                                                                       www.grosvenor.com


                               Our portfolio                                 on understanding our customers will
                               The sectoral breakdown of our portfolio       give further weight to business strategy   NEO Bankside                                                                                            Parkside Place                                                                     The Grouss residential portfolio
                               by value changed little, being 40.3%          and product research and development,      City:                                          London                                                   City:                       Cambridge                                              City:             Edinburgh and Glasgow
                               residential, 31.3% retail and 28.4%           as well as our promotional and selling
                                                                                                                        Country:                                       England                                                  Country:                    England                                                Country:          Scotland
                               office. This reflected the low level of         activities.
                               transactional activity. Following sales                                                  Sector:                                        Residential                                              Sector:                     Residential                                            Sector:           Residential
                               in 2009, gearing was reduced, giving          The outlook                                Type:                                          Development                                              Type:                       Development                                            Type:             Investment
                               us extra capacity to take advantage           In the short–term, we expect pressure      Area:                                          38,000m2                                                 Area:                       11,600m2                                               Area:             33,100m2
                               of opportunities in 2010.                     on public finances and the impact on        Ownership:                                     Held in joint venture                                    Ownership:                  Wholly owned                                           Ownership:        Held in joint venture
                                                                             consumption of higher unemployment
                               Rental income was down as a result of                                                    This development, almost directly opposite                                                              We are creating 99 apartments at this prime                                        The Grouss Portfolio was assembled as a
                                                                             and taxes to impede economic growth.
                               last year’s disposals but, with occupancy                                                St Paul’s Cathedral, has become a much                                                                  site in the centre of Cambridge. Continuing                                        handpicked collection of high–quality period
                                                                             However, property remains a cyclical
                               rates at 93.4% (2009: 93.5%) — and for                                                   admired talking point in the regeneration                                                               our long association with Cambridge, the                                           residential properties in some of the best
                                                                             business and we believe the market
                               properties available to rent at year end,                                                of the south side of the river Thames.                                                                  project also includes the development of                                           addresses in Edinburgh and Glasgow. All are
                                                                             will improve in 2012, partly boosted       The first purchasers moved in just after                                                                 a replacement state–of–the–art fire station.                                        prime properties, which are likely to attract
                               98% (2009: 97%) — the portfolio




                                                                                                                                                                                                                                                                                                                                                                                                     Grosvenor Britain & Ireland
                                                                                                                                                                                                                                                                                                                                                                                                     Investment and development
                                                                             by the Olympics and associated             the year end and the UK sales launch begins                                                                                                                                                strong capital growth over the medium–
                               performed well, particularly our ‘market                                                                                                                                                         This is a computer–generated image.
                                                                             infrastructure works.                      in spring 2011.                                                                                                                                                                            to long–term. Managed by Grosvenor, the
                               let’ properties in Mayfair and Belgravia.                                                                                                                                                                                                                                           portfolio comprises 290 flats, townhouses,
                               The revaluation of the London estate          Although the recovery looks weak in the    This is a computer–generated image.                                                                                                                                                        houses and serviced apartments, which
                               (+15.9%) made a strong contribution           medium–term, we expect there will be                                                                                                                                                                                                  were all fully let at year end.
                               to our results. Part of this revaluation,     significant opportunities for residential
                               £197m (13.4%), was due to the overall         and commercial development, with
                               market uplift; active management —            limited but growing competition, given
                               including refurbishments, changes of use      the lack of financing generally available
                               and planning consents — contributed an        and low levels of construction. We see
                               additional £37m (2.5%) of added–value at      most of these opportunities arising
                               the year end. Throughout the portfolio,       in London and the South East.
                               our attention to crucial matters such as
                                                                             Overall, we are confident about the
                               voids and rent reviews also helped to
                                                                             future. We are making good progress
                               maximise income.
                                                                             in improving operational performance
                                                                             across all our activities and our
                               Operational highlights
                                                                             long experience gives us a detailed
                               We took further steps to increase
                                                                             understanding of our markets. We
                               the effectiveness of our team.
                                                                             believe London will remain an attractive
                               We completed an extensive reorganisation      destination for international investors,
                               arising from the ‘Fast Forward’ review        businesses and visitors, maintaining and
                               of our London estate business, reshaping      increasing demand for our properties.
                               a leaner team around key locations
                               and their customers. This is playing a
                               key role in improving revenue profit
                               and customer satisfaction, and we have
                               clear targets for further operational
                               improvement in 2011.
                               We made three notable external
                               appointments in May. Craig McWilliam
                               joined the Board as Executive Director,
                               Grosvenor Developments, responsible for
                               all trading activity off the London estate.
                               Already his broad real estate investment
                               experience, complementing the skills
                               of our development team, has allowed                                                                FLEET ST LUDGATE

                               us to set a clearer direction for this
                               business. Ulrike Schwarz–Runer joined
                               us as in–house General Counsel and has
                                                                                                                                                                       BLACKFRIARS
                               since been promoted to the Board — the




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Grosvenor Annual Report 2010   Investment and development – Grosvenor Britain & Ireland                                       30     Grosvenor Annual Report 2010                                 Investment and development – Grosvenor Britain & Ireland                                                          31
www.grosvenor.com                                                                                                                    www.grosvenor.com



GROsvEnOR                      Non–Executive Directors                             Executive Directors                               GROsvEnOR
BRITAIn                        1 Graham Pimlott (Chairman) was a Partner
                               at Lovells before taking senior roles within
                                                                                   6 Peter Vernon MRICS (Chief Executive) joined
                                                                                   Grosvenor in 2005 to take responsibility for      BRITAIn
& IRElAnD                      BZW and Barclays PLC. He is a Non–Executive
                               Director of Tesco Personal Finance and has
                                                                                   Grosvenor’s direct and indirect property
                                                                                   investments in the UK and Ireland, including
                                                                                                                                     & IRElAnD
BOARD OF                       held several other non–executive director
                               roles in the past.
                                                                                   Grosvenor’s London estate and, from 2006, the
                                                                                   London development business. He is a member
                                                                                                                                     pROpERTy
DIREcTORs                                                                          of the Royal & Sun Alliance London Regional       pORTFOlIO
                               2 Michael Gradon is the Senior Independent          Board and the Board of London First.
As at 17 March 2011            Director of Modern Water plc, a Non–Executive       Previously he was a Partner at IBM Business
                               Director of Aercap Holdings NV and Exclusive        Consulting Services and PwC Consulting.
                               Hotels, and on The Committee of Management
                               of the All England Lawn Tennis Club and             7 Roger Blundell ACA (Finance Director)
                               Wimbledon Tennis Championships. He was              joined Grosvenor in 2007. He was previously       Investment properties
                               previously a Main Board Director at P&O.            Group Finance Director at Kensington Group
                                                                                   Plc, Finance Director at BSkyB Interactive, and                                                                         Gross yields                                                              Values




                                                                                                                                                                                                                                                                                                                            Grosvenor Britain & Ireland
                                                                                                                                                                                                                                                                                                                            Investment and development
                               3 Heather Rabbatts is a Non–Executive               Director of Group Finance, Tax and Treasury                                                       Passing                              Running    Reversionary       Number of        Grosvenor                   Third   Assets under
                               Director of Cross London Rail Links Ltd and is on   at Kingfisher.                                                                                        rent             ERV                 yield           yield      properties           share                   party   management
                                                                                                                                                                                         £m               £m                    %               %                              £m                      £m             £m
                               the board of several non–profit organisations
                               including the Royal Opera House. She has            8 Giles Clarke MRICS (Executive Director,         Office                                            29.8             40.9                  4.3             5.9            243            692.5                   573.3       1,265.8
                               previously held several Board positions in          London Estate) joined Grosvenor in 2007.          Retail                                           38.0             48.9                  5.4             7.0            102             701.7                1,170.5       1,872.2
                               commercial, not–for–profit and government            He is responsible for the London estate,          Residential*                                     14.7             16.6                  1.9             2.1            384            780.4                   751.7        1,532.1
                               organisations.                                      including all investment, development and
                                                                                                                                                                                      82.5            106.4                  3.8             4.9             729         2,174.6                2,495.5        4,670.1
                                                                                   property management activity. He was
                               4 Mark Preston MRICS (Group Chief Executive)        previously at The Crown Estate where he was       Managed by Grosvenor Britain & Ireland                                                                                  710         1,709.8                1,140.3        2,850.1
                               joined Grosvenor in the UK 1989. Seconded to        Director of Investment & Asset Management.        Managed by Grosvenor Fund Management                                                                                     19           464.8                1,355.2        1,820.0
                               Hong Kong in 1995, he returned to lead our
                               fund management operations in 1997, spent           9 Craig McWilliam MRICS (Executive Director,                                                                                                                              729         2,174.6                2,495.5        4,670.1
                               four years in San Francisco from 2002, became       Grosvenor Developments) joined Grosvenor in
                                                                                                                                     *The majority of the residential portfolio is ground rented and, because of this, it has a low average yield. The average yield on the rack–rented residential portfolio is 4.4%.
                               Chief Executive of Grosvenor Britain & Ireland      2010. He was previously Managing Director at
                               in 2006 and Group Chief Executive in 2008.          Fortress Investment Group with responsibility
                               He is on the Board of the Association of Foreign    for real estate in the company’s European         Development and trading properties
                               Investors in Real Estate and a member of the        private equity business. Previously he worked                                                                                                                                         Values
                               North West Business Leaders’ Team. He is a          at Chesterton, at UBS and at Rodamco.                                                                                                                                                                            Future
                               Non–Executive Director of Sonae Sierra SGPS.                                                                                                                                                            Number of        Grosvenor            Third            development    Assets under
                                                                                   10 Ulrike Schwarz–Runer Doctor of Laws                                                                                                              properties           share            party            commitment     management
                                                                                                                                                                                                                                                              £m               £m                      £m             £m
                               5 Nicholas Scarles FCA CPA ATTORNEY AT LAW          (General Counsel) joined Grosvenor in 2010
                               (Group Finance Director) joined Grosvenor           and advises Grosvenor Britain & Ireland and the   Office                                                                                                      3           4.5               —                    14.6            19.1
                               in 2004. He was previously at Centrica,             Grosvenor Group. She was previously General       Retail                                                                                                     2          64.3              7.2                   28.5          100.0
                               Price Waterhouse, and Coopers and Lybrand.          Counsel of a sovereign wealth fund and prior to   Residential                                                                                                9         205.8             94.5                  248.1          548.4
                               He is a Governor of the Haberdashers’ Elstree       that Executive Director at Goldman Sachs. She
                                                                                                                                     Managed by Grosvenor Britain & Ireland                                                                   14          274.6             101.7                  291.2         667.5
                               Schools, Member of the Court of Assistants          is qualified to practise law in England & Wales,
                               of the Haberdashers Livery Company and a            New York and Austria.
                               Non–Executive Director of Sonae Sierra SGPS.
                                                                                                                                     Geographic analysis
                                                                                                                                                                                                                                                                                         Grosvenor share
                                                                                                                                                                                                                                                                        Investment            Development           Total
                                                                                                                                                                                                                                                                               £m                     £m              £m

                                                                                                                                     London                                                                                                                               1,712.2                 164.4        1,876.6
                                                                                                                                     Outside London                                                                                                                        462.4                   110.2         572.6
                                                                                                                                                                                                                                                                         2,174.6                  274.6        2,449.2


              1                2                                  3                                 4




                               5                                  6                                 7




                               8                                  9                                 10
Grosvenor Annual Report 2010                         Investment and development – Grosvenor Britain & Ireland                                    32      Grosvenor Annual Report 2010                       Investment and development – Grosvenor Britain & Ireland                                        33
www.grosvenor.com                                                                                                                                        www.grosvenor.com



GROsvEnOR
BRITAIn
& IRElAnD
pROpERTy
pORTFOlIO
continued



Grosvenor Britain & Ireland has interests in and manages a portfolio of assets across 300 acres of Mayfair and Belgravia, some parts of which are        Property                             Description                                               Location                        Area m2
owned by the Grosvenor Trusts. More than 700 retail, residential and commercial properties make up the portfolio. Set out below are the clusters of
                                                                                                                                                         Investment properties — directly owned




                                                                                                                                                                                                                                                                                                                    Grosvenor Britain & Ireland
                                                                                                                                                                                                                                                                                                                    Investment and development
assets that represent some of the strategic locations on the London estate; the table opposite shows some of the assets held outside London, and large
individual properties in the London portfolio.                                                                                                           Office
                                                                                                                                                         25 Berkeley Square                  10–floor refurbished and partly–rebuilt office building      West End, London                4,800
                                                                                                                                                         52/54 Brook Street                  Serviced office space                                       West End, London                 1,100
Grosvenor Street                                                             Grosvenor Square                                                            Brookfield House,
Location                  Mayfair, London                                    Location                  Mayfair, London                                   62/64 Brook Street                  Seven–floor 1920s office building                            West End, London                1,900
Sector                    Office                      74 offices               Sector                    Office                     15 offices               Retail
                          Retail                     16 units                                          Residential               61 units                Liffey Valley Shopping Centre       Regional shopping centre with 94 retail units and cinema   Dublin, Republic of Ireland    36,300
                          Residential                13 units                                          Hotels                    2 units                 Residential
Area                      70,700m2                                           Area                      130,000m2                                         Erskine House                       11 residential apartments                                  West End, London                1,000
Located within the heart of Mayfair, Grosvenor Street is one of              A large garden square in the heart of Mayfair. The central garden, which    25 Gilbert Street                   Residential apartment block                                West End, London                1,600
London’s premier office locations. Behind many of the period façades          is surrounded by residential apartments, hotels and offices (including the   97/99 Park Street                   Residential apartment block                                West End, London                1,500
sit state–of–the–art modern offices.                                          US Embassy), is now a public space managed by the Royal Parks.              Mixed–use
                                                                                                                                                         Grosvenor Hill Court                Two–floor office building with 30 residential units
                                                                                                                                                                                             and car park                                               West End, London                7,300
                                                                                                                                                         Investment properties — held in joint ventures
Duke Street                                                                  Mount Street                                                                Office
Location                  Mayfair, London                                    Location                  Mayfair, London                                   Viewpoint — Mayfair                  Nine–floor, open–plan refurbished office building with
Sector                    Office                      21 offices               Sector                    Office                     23 offices                                                    three retail units in Oxford Street                       West End, London                4,600
                          Retail                     29 units                                          Retail                    53 units
                          Residential                30 units                                          Residential               113 units
Area                      9,700m2                                            Area                      78,800m2
                                                                                                                                                         Property                             Description                                               Location                        Area m2   Completion date
A fashionable, quiet street in the heart of Mayfair which provides the       A vibrant mixed–use street and surrounding area populated with a
                                                                                                                                                         Principal development and trading properties — directly owned
main pedestrian route from busy Oxford Street to Grosvenor Square.           growing number of luxury retailers. Renowned restaurants and fine period
                                                                                                                                                         Office
                                                                             residential apartments characterise this fashionable area of Mayfair.
                                                                                                                                                         40/54 Grosvenor Hill               Prime commercial offices with retained facades               West End, London                2,800             2012
                                                                                                                                                         18—20 Grosvenor Street             Part new, part refurbished prime commercial offices          West End, London                5,600             2013
                                                                                                                                                         Residential
                                                                                                                                                         55/73 Duke Street                  16 apartments and 1,500m2 retail                            West End, London                5,000              2012
Motcomb Street                                                               Eaton Square
                                                                                                                                                         52 Green Street                    Five residential apartments                                 West End, London                  600              2011
Location                  Belgravia, London                                  Location                  Belgravia, London
                                                                                                                                                         30 North Audley Street             Nine apartments and a 500m2 restaurant                      West End, London                2,100              2011
Sector                    Office                      6 offices                Sector                    Residential units on six floors
                                                                                                                                                         One Park West                      Residential apartment block                                 Liverpool, Merseyside          19,100             2009
                          Retail                     47 units                                          in historic Grade 2* Listed Buildings
                                                                                                                                                         Parkside Place                     Residential apartment block with 99 units                   Cambridge,                     11,600              2012
                          Residential                21 units                Area                      63,000m2
                                                                                                                                                                                                                                                        Cambridgeshire
Area                      12,600m2
                                                                             Lying at the heart of Belgravia and bordered by Chelsea, Knightsbridge,     Hotel
A quiet enclave close to Sloane Street and Knightsbridge which is            Pimlico and Hyde Park, Eaton Square is recognised as one of the             8 Balderton Street                   80–bed boutique hotel and restaurant                      West End, London                5,800             2012
home to high–end, specialist retailers in fashion, accessories, art and      finest residential addresses in the world. Arranged around six
                                                                                                                                                         Development and trading properties — held in joint ventures
antiques, Michelin–star restaurants and other amenities which serve          private gardens, the square is a series of imposing classical, stucco–
                                                                                                                                                         Office
the local community.                                                         fronted terraces.
                                                                                                                                                         29—37 Davies Street                New prime commercial offices and retail                      West End, London                4,900             2013
                                                                                                                                                         Residential
                                                                                                                                                         NEO Bankside                       Residential apartment block                                 Central London                 38,000      2010–2012
                                                                                                                                                         Campden Hill                       Luxury apartment block                                      Holland Park, London           18,000           2016
                                                                                                                                                         3–10 Grosvenor Crescent            Grade II* listed apartment building with 15 units           West End, London                7,400           2011
                                                                                                                                                         Grouss                             Portfolio of 290 flats, townhouses, houses                   Edinburgh & Glasgow,           33,100           2010
                                                                                                                                                                                            and serviced apartments                                     Scotland
                                                                                                                                                         Trumpington Meadows                Development land                                            Cambridge,                    240,000             2016
                                                                                                                                                                                                                                                        Cambridgeshire
                                                                                                                                                         Mixed–use
                                                                                                                                                         Springside                           Mixed–use, city centre scheme                             Edinburgh, Scotland            83,200             2015
                                                                                                                Grosvenor Annual Report 2010   Investment and development – Grosvenor Americas       35
                                                                                                                www.grosvenor.com



                                                                                                                GROsvEnOR                      Grosvenor Americas’ aim is to achieve a
                                                                                                                AmERIcAs                       leading position in well-chosen geographic
                                                                                                                                               and sectoral markets, thus continuing the
                                                                                                                                               focused expansion of the business. Our
                                                                                                                                               ever-improving knowledge base and brand
                                                                                                                Andrew Bibby
                                                                                                                                               recognition facilitate the flow of attractive
                                                                                                                Chief Executive                deals upon which investment and development
                                                                                                                                               activity depends.
                                                                                                                                               We have been active in North America
                                                                                                                                               for nearly 60 years, having had an office
                                                                                                                                               in Vancouver since 1953, in San Francisco
                                                                                                                                               since 1977, in Washington since 1988 and
                                                                                                                                               in Calgary – with one small gap – since 1997.
                                                                                                                                               Andrew Bibby, Chief Executive, leads our
                                                                                                                                               Americas team of 62 people. He has been




                                                                                                                                                                                                          Grosvenor Americas
                                                                                                                                                                                                          Investment and development
                                                                                                                                               with Grosvenor for 27 years.




                                                                                                                highlights                     number of assets at each property location
                                                                                                                Grosvenor Americas             Grosvenor Americas



                                                                                                                8.6%
                                                                                                                                                Canada
                                                                                                                                                 A Calgary         4

                                                                                                                                                 B Vancouver       7
                                                                                                                Total returns                                                              A
                                                                                                                                                 C Victoria        1
                                                                                                                2009 –14.4%                                                        B



                                                                                                                C$14.3m
                                                                                                                                                                       C
                                                                                                                                                USA
                                                                                                                                                                           H
                                                                                                                                                 D Chicago         3

                                                                                                                                                 E
                                                                                                                                                Los Los Angeles    2
                                                                                                                Revenue profit                    F San Francisco   5
                                                                                                                2009 C$33.5m                                                                     D
                                                                                                                                                                                                     I
                                                                                                                                                 G San Jose        3

                                                                                                                                                H Seattle          8           F
                                                                                                                                                                                   G
                                                                                                                                                 I Washington, DC 19
12:00 hours Eau claire market, calgary, canada                                                                                                                                         E
The property market in Canada is buoyed by the strength of natural resources in the west, giving us confidence
in our first residential development in Calgary.
Grosvenor Annual Report 2010           Investment and development – Grosvenor Americas                                    36    Grosvenor Annual Report 2010   Investment and development – Grosvenor Americas                                                                                       37
www.grosvenor.com                                                                                                               www.grosvenor.com


Grosvenor’s share of property assets   Once again Grosvenor Americas                 service sector; a dynamic local economy
                                       delivered a creditable performance, given     and good transportation links. We know     Drake                                                                                                             13TH AVENUE SW
By sector C$m                          the uncertainties in the economy: the         our cities well: we have offices in our




                                                                                                                                                                                                            9TH STREET SW




                                                                                                                                                                                                                                  8TH STREET SW
                                                                                                                                City:         Calgary          We started pre–sales in October at this




                                                                                                                                                                                                                                                                                     6TH STREET SW




                                                                                                                                                                                                                                                                                                      5TH STREET SW
                                       portfolio performed well in both US           four primary markets (Calgary, San                                        residential development in a prominent                                             14TH AVENUE SW
                                                                                                                                Country:      Canada
                                       and Canadian markets, testifying to           Francisco, Vancouver and Washington,                                      location near Calgary’s premier retail and
                                       the importance of active management           DC) and we are familiar with the real      Sector:       Residential      entertainment high street, known as 17th                                           15TH AVENUE SW

                                       and careful selection of assets.              estate fabric and players in our           Type:         Development      Avenue. With 30 confirmed sales at the year
                                                                                     secondary markets (Chicago, Los                                           end, we were already 44% complete with         16TH AVENUE SW
                                                                                                                                Area:         10,000m2
                                                                                                                                                               our pre–sales programme. Construction is                                           17TH AVENUE SW
                                       Key performance indicators                    Angeles and Seattle).                      Ownership:    Wholly owned     scheduled to start in the summer of 2011.
                                       It has been a year of solid returns at




                                                                                                                                                                                                                                                                   COLLEGE LANE SW
                                                                                     Grosvenor Americas has a track record                                     This is a computer–generated image.
                                                                                                                                                                                                                            18TH AVENUE SW
                                       8.6%, compared with –14.4% in 2009.
                                                                                     in five sectors — retail, residential,
                                       Revenue profit was down, at C$14.3m            industrial, office and hotel. However, we
                                       (2009: C$33.5m), reflecting both a lack        continue to focus on narrower specialist
                                       of trading profit and a final shrinking of      capabilities, especially upper–end urban
   O ce                                our portfolio in the first half of the year    retail locations and open–strip shopping
   C$118.8m                  11.6%     through tactical asset sales that further     malls catering to basic needs in up–
   Retail                              replenished our cash resources and            market residential areas. Our portfolio
   C$542.9m                 52.8%      increased liquidity, allowing us to re–       also has different emphases location by
   Residential                         enter the market at the best time to          location — so, for instance, we see
   C$222.8m                 21.7%      generate value.                               cyclical opportunities in Washington, DC
   Hotel                                                                             in the supply–constrained office sector.
   C$15.6m                     1.5%    Assets under management (excluding
                                       our co–investment in Grosvenor funds)         At year end, 93% of our capital
   Industrial
                             12.4%     were C$1.7bn, an increase from C$1.6bn.       was in investment assets and 7% in




                                                                                                                                                                                                                                                                                                                      Grosvenor Americas
                                                                                                                                                                                                                                                                                                                      Investment and development
   C$127.4m
                                                                                     development projects. Long–term,
                                       The market in 2010                            we expect to have 80% of our capital
By region C$m
                                       Grosvenor Americas operates in two            in income–producing investments
                                       very different economies, in both             and 20% in development activities.
                                       of which property transaction volume
                                                                                     Overall, we have trimmed our portfolio
                                       is now increasing.
                                                                                     to release capital in readiness to buy
                                       Canada continues to benefit from               investment and development assets
                                       the strength of its natural resources,        which become available — not least
                                       particularly in the west, and the stability   when lenders tackle their impaired
                                       of its banking system. Economic activity      loans: most such disposals will be
                                       has been sustained and the banks              orderly, but there will always be assets
                                       are willing to lend to creditworthy           which arrive suddenly on the market
                                       individuals and institutions for properties   and which offer an exceptional
   USA
                                       with strong fundamentals: as a result,        opportunity — and we are prepared to
   C$702.1m                 68.3%      property values have been maintained.         move quickly to secure these too.
   Canada                              The USA, however, has seen stubbornly         We have bought carefully — notably
   C$325.4m                 31.7%      high unemployment persist in reducing         sites in North and West Vancouver
                                       occupier demand for property at the           in Canada — ensuring that, while our
By activity C$m                        same time that many banks have been           inventory remains low, we have the
                                       trying to reduce their exposure to            option to develop if and when the
                                       the sector without signalling distress.       timing is right.
                                       Although ‘trophy assets’ may now be
                                                                                     We decided to relaunch our successful
                                       as highly valued as they were before the
                                                                                     programme of mezzanine lending as
                                       recession, with investors seeking yields
                                                                                     market conditions improve.
                                       that are not achievable with deposits
                                       or debt instruments, there are very           We continue to maximise our ability
                                       few of these assets and their resilience      to generate value for our Shareholders,
                                       should not be mistaken for a revival in       and to minimise our exposure to
                                       the asset class as a whole. As with the       risk, by working in partnerships on
                                       long bond market, there is also a real        specific projects — often repeatedly
   Investment                          concern that rising interest rates will       collaborating with other organisations
   C$958.1m                 93.3%      cause capitalisation rates to increase,       who share our expectations of
   Development
                                       thereby reducing capital values.              performance and with whom there
   C$69.4m                     6.7%    By carefully adjusting our strategy in
                                                                                     is mutual trust. In 2010, we embarked
                                                                                     on two new relationships: one, a joint
                                       the light of these conditions, we ensured
                                                                                     venture with The JBG Companies; the
                                       that in 2010 we benefited in Canada
                                                                                     other, a multi–region partnership for
                                       and managed the risk in the USA.
                                                                                     the development of high–end residential
                                                                                     properties in Vancouver with a
                                       Strategy
                                                                                     sovereign wealth fund, alongside our
                                       That strategy is, as before, to focus on
                                                                                     colleagues in Grosvenor Asia Pacific
                                       cities which have a youthful, growing
                                                                                     and Grosvenor Australia.
                                       and educated workforce; a well–paid
Grosvenor Annual Report 2010                                                                               Investment and development – Grosvenor Americas                                                                                                     38   Grosvenor Annual Report 2010   Investment and development – Grosvenor Americas                                     39
www.grosvenor.com                                                                                                                                                                                                                                                   www.grosvenor.com


                                                                                                                                                                                                                                                                                                   We also co–invest in funds managed             We have maintained occupancy rates
830 North Michigan Avenue                                                                                                                                                                                                                                                                          by our colleagues in Grosvenor Fund            at 94% (2009: 95%). This contribution
City:                                              Chicago, Illinois                                                                                                                                                                                                                               Management where the strategy for              to a strong cashflow reflects well not
                                                                                                                                                                                                                                                                                                   their funds complements that of our            only on our choice of assets but also
Country:                                           USA
                                                                                                                                                                                                                                                                                                   proprietary portfolio.                         on the efforts of our asset management
Sector:                                            Retail                                                                                                                                                                                                                                                                                         team to stay close to tenants and
Type:                                              Investment                                                                                                                                                                                                                                      Property highlights                            minimise surprises.
Area:                                              11,600m2                                                                                                                                                                                                                                        We have a C$1.1bn development ‘pipeline’,
                                                                                                                                                                                                                                                                                                                                                  A portfolio highlight was the letting
Ownership:                                         Held in joint venture                                                                                                                                                                                                                           of which only C$106m has been committed
                                                                                                                                                                                                                                                                                                                                                  of space at 830 North Michigan Avenue
                                                                                                                                                                                                                                                                                                   to date. We recently purchased key
Topshop/Topman signed a 4,632m2 lease in                                                                                                                                                                                                                                                                                                          in Chicago, when vacated by Borders
                                                                                                                                                                                                                                                                                                   properties on the 1300 block of Marine
September 2010 at our 830 North Michigan                                                                                                                                                                                                                                                                                                          Books, to Topshop/Topman (see
                                                                                                                                                                                                                                                                                                   Drive in West Vancouver’s Ambleside
Avenue building, located in the heart of                                                                                                                                                                                                                                                                                                          opposite), a well–known UK retailer and a
                                                                                                                                                                                                                                                                                                   Village, and are launching a public
Chicago’s ‘Magnificent Mile’. The UK fashion                                                                                                                                                                                                                                                                                                       tenant in the UK’s Liverpool ONE shopping
retailer expects to open the new store, its                                                                                                                                                                                                                                                        process to rezone the entire waterfront
                                                                                                                                                                                                                                                                                                                                                  centre (Grosvenor Liverpool Fund).
second US shopping destination, in the                                                                                                                                                                                                                                                             block for comprehensive mixed–use
autumn of 2011.                                                                                                                                                                                                                                                                                    development. In the North Vancouver            We sold a further 28 of the 88 units
This is a computer–generated image.
                                                                                                                                                                                                                                                                                                   neighbourhood of Central Lonsdale,             in our only development inventory, at
                                                                                                                                                                                                                                                                                                   we entered into a co–development               High Street, Surrey, British Columbia,
                                                                                                                                                                                                                                                                                                   venture to develop an 18–storey                leaving only six units unsold at year end.
                                                                                                                                                                                                                                                                                                   residential–retail building.
                                                                                                                                                                                                                                                                                                                                                  Operational highlights
                                                                                                                                                                                                                                                                                                   To the south of San Francisco, the
                                                                                                                                                                                                                                                                                                                                                  2010 was a year of change in the Non–
                                                                                                                                                                                                                                                                                                   North 40 mixed–use development has
       N LARABEE STREET




                                                                                                                                                                                                                                                                                                                                                  Executive Directors on our Board.
                                  N WELLS STREET




                                                                                                                                                                                                                                                                                                   received General Plan approval by the
                                                                                                                                                                                                                                                                                                                                                  Brandt Louie succeeded Ralph Severson




                                                                                                                                                                                                                                                                                                                                                                                               Grosvenor Americas
                                                                                                                                                                                                                                                                                                                                                                                               Investment and development
                                                                                                                                                                                                                                                                                                   Town of Los Gatos. East of San Francisco
                                                                                                                                                                                                                                                                                                                                                  as Chairman on 31 March 2010. John
                                                                            NL




                                                                                                                                                                                                                                                                                                   in Pleasant Hill, we are in the early stages
                                                                              AKE




                                                                                                                                                                                                                                                                                                                                                  Roberts joined on 1 October 2010 and
                                                                                                                                                                                                                                                                                                   of developing a 19,000m2 grocery–
                                                                                  SHO




                          W CHICAGO AVENUE
                                                                                                                                                                                                                                                                                                                                                  Martha Piper left on 1 December 2010,
                                                                                     RE




                                                                                             PFC MILTON
                                                                                                                                                                                                                                                                                                   anchored, mixed–use centre.
                                                                                        DR




                                                                                             OLIVE PARK
 E OHIO STREET                    W OHIO STREET
                                                                                                                                                                                                                                                                                                                                                  while James Hyman succeeded Lizanne
                                                                                                                                                                                                                                                                                                   Meanwhile, our multi–family presence
                                                                                                                                                                                                                                                                                                                                                  Galbreath on 25 February 2011. Ralph,
        W KINZIE STREET
                                                                                                                                                                                                                                                                                                   continues to grow in Washington State’s
                                 E WACKER DR                                                                                                                                                                                                                                                                                                      Martha and Lizanne had served on the
                                                          MICHIGAN AVENUE




                                                                                                                                                                                                                                                                                                   Puget Sound region, with two recent
                                                                                                                                                                                                                                                                                                                                                  Board since February 2007, March 2007
                                                                                                                                                                                                                                                                                                   acquisitions: Northshore Townhomes,
       W WASHINGTON STREET                                                                       CHICAGO                                                                                                                                                                                                                                          and May 2002 respectively: we thank
                                                                                                 HARBOUR                                                                                                                                                                                           an 86–unit property in Kenmore; and
                                                                                                                                                                                                                                                                                                                                                  them all for their contributions.
                                                                                                                                                                                                                                                                                                   Woodcreek Apartment Homes, a 164–
                                                                                                                                                                                                                                                                                                   unit property in Lynwood.                      Scott Brody joined us in the autumn as
                                                                                                                                                 District Condos                                                                                                                                   In a recovering market, it is particularly
                                                                                                                                                                                                                                                                                                                                                  Vice President of Investments.
                                                                                                                                                 City:                                          Washington, DC                                                                                     important to achieve pre–sales                 Our operation is lean but can readily be
                                                                                                                                                 Country:                                       USA                                                                                                before committing to further capital           ‘staffed up’ to implement development
                                                                                                                                                 Sector:                                        Residential and retail                                                                             expenditure. We began marketing the            projects when the timing is right.
                                                                                                                                                                                                                                                                                                   135 residential units of Drake, a multi–
                                                                                                                                                 Type:                                          Development
                                                                                                                                                                                                                                                                                                   family residential project in Calgary          The outlook
                                                                                                                                                 Area:                                          11,100m2                                                                                           (see page 37) in late 2010. We will do         In the US, stimulative fiscal and
                                                                                                                                                 Ownership:                                     Held in joint venture                                                                              the same with another multi–family             monetary policy is expected to increase
                                                                                                                                                                                                                                                                                                   development, District Condos in                the rate of growth in the first half of
                                                                                                                                                 District Condos is a mixed–use residential/
                                                                                                                                                 retail development in the vibrant 14th Street                                                                                                     Washington, DC, which started on–site          2011. Canada will not benefit from
                                                                                                                                                 neighbourhood of Washington, DC. The                                                                                                              in January 2011 (see opposite).                similar stimulus but, as it remains
                                                                                                                                                 project will feature six residential levels                                                                                                                                                      dependent on its neighbour for 70%
                                                                                                                                                                                                                                                                                                   It is also important to be open to
                                                                                                                                                 containing 125 condominiums, a roof top pool                                                                                                                                                     of its exports, it should benefit in the
                                                                                                                                                 and outdoor lounge, and 1,800m2 of ground–                                                                                                        tactical sales at the right moment
                                                                                                                                                                                                                                                                                                                                                  very short–term from the US policy
                                                                                                                                                 floor retail. It is due for completion in 2012.                                                                                                    in the cycle. We sold our joint venture
                                                                                                                                                                                                                                                                                                                                                  response. The growth gap between the
                                                                                                                                                                                                                                                                                                   investment South Point Exchange,
                                                                                                                                                 This is a computer–generated image.                                                                                                                                                              two countries is expected to narrow or
                                                                                                                                                                                                                                                                                                   Surrey, Vancouver, British Columbia,
                                                                                                                                                                                                                                                                                                                                                  even reverse. Western Canada will
                                                                                                                                                                                                                                                                                                   in August in a strong market, at a price
                                                                                                                                                                                                                                                                                                                                                  continue to benefit from increased
                                                                                                                                                                                                                                                                                                   21% higher than our 2009 year end
                                                                                                                                                                                                                                                                                                                                                  demand for its commodities.
                                                                                                                                                                                                                                                                                                   value, and 106 South Union Street,
                                                                                                                                                                           16TH STREET NW
                                                                                                                                                                                            14TH STREET NW




                                                                                                                                                                                                             COLUMBIA ROAD NW
                                                                                                                                                                                                                                                                                                   Alexandria, Virginia, in June at a price       Although we expect US and Canadian
                                                                                                                                                                                                                                                                                                   20% higher than book value.                    growth to pick up in the medium to
                                                                                                                                                    CON




                                                                                                                                                                                                                                    McMILLAN
                                                                                                                                                                                                                                                        NE
                                                                                                                                                       NEC




                                                                                                                                                                                                                                    RESERVOIR
                                                                                                                                                                                                                                                    NUE                                                                                           long–term, there will be headwinds.
                                                                                                                                                                                                                                                 AVE
                                                                                                                                                          TICU




                                                                                                                                                                                                                                            ND
                                                                                                                                                                                                                                         SLA
                                                                                                                                                                                                                                     DE I                                                          Our portfolio                                  To counter this, we will continue to focus
                                                                                                                                                              T AV




                                                                                                                                                                                                                                  RHO
                                                                                                                                                                  ENU




                                                                                                                                                                                                                                                  EN
                                                                                                                                                                                                                                                    W                                              Our portfolio remains essentially urban;       on markets with youthful demographics
                                                                                                                                                                     EN




                                                                                                                                                                                                                                               ENU
                                                                                                                                                                                                                  9TH STREET NW




                                                                                                                                                                                                                                           K AV
                                                                                                                                                                       W




                                                                                                                                                                                                                                    NEW
                                                                                                                                                                                                                                        YOR                                                        the sales in 2010 further reduced our          and high population growth.
                                                                                                                                                                     K STREET NW
                                                                                                                                                                                                                                                 H STREET NW
                                                                                                                                                                                                                                                                                                   exposure to outlying areas.

                                                                                                                                                                      CONSTITUTION AVENUE NW
                                                                                                                                                                                                                                                                                                                             KORNHIL L
                                                                                                                                                                     INDEPENDENCE AVENUE SW


                                                                                                                                                                                                              SOUTHWEST FREEWAY
Grosvenor Annual Report 2010   Investment and development – Grosvenor Americas                                              40       Grosvenor Annual Report 2010                Investment and development – Grosvenor Americas                                                          41
www.grosvenor.com                                                                                                                    www.grosvenor.com



GROsvEnOR                      Non–Executive Directors                            4 Mark Preston MRICS (Group Chief Executive)
                                                                                  joined Grosvenor in the UK 1989. Seconded to       GROsvEnOR
AmERIcAs                       1 Brandt C. Louie OBC LLD FCA (Chairman)
                               is Chairman and CEO of H.Y. Louie Co. Limited
                                                                                  Hong Kong in 1995, he returned to lead our
                                                                                  fund management operations in 1997, spent
                                                                                                                                     AmERIcAs
BOARD OF                       and Chairman of the Board for London Drugs
                               Ltd. He serves as Chancellor of Simon Fraser
                                                                                  four years in San Francisco from 2002, became      pROpERTy
DIREcTORs                                                                                                                            pORTFOlIO
                                                                                  Chief Executive of Grosvenor Britain & Ireland
                               University and as a board member, officer           in 2006 and Group Chief Executive in 2008.
                               or trustee of numerous organisations,              He is on the Board of the Association of Foreign
As at 17 March 2011            including Royal Bank of Canada, IGA Canada,        Investors in Real Estate and a member of the
                               World Economic Forum, Duke University              North West Business Leaders’ Team. He is a
                               Medical Center, Duke Heart Center, Vancouver       Non–Executive Director of Sonae Sierra SGPS.
                               Community College, Vancouver Board of Trade,
                               Fraser Institute, and Harvard University’s John    5 Nicholas Scarles FCA CPA ATTORNEY AT LAW
                               F. Kennedy School of Government.                   (Group Finance Director) joined Grosvenor
                                                                                  in 2004. He was previously at Centrica,            Investment properties
                               2 James E. Hyman has more than 25 years’           Price Waterhouse, and Coopers and Lybrand.
                               experience in international business leadership.   He is a Governor of the Haberdashers’ Elstree
                                                                                                                                                                                      Gross yields                                                         Values
                               Until its 2010 sale, he was Chairman, President,   Schools, Member of the Court of Assistants                                           Passing                       Running    Reversionary    Number of      Grosvenor                   Third   Assets under
                               CEO and a Director of Houston–based Cornell                                                                                                rent       ERV                yield           yield   properties         share                   party   management
                                                                                  of the Haberdashers Livery Company and a                                                C$m        C$m                   %               %                        C$m                     C$m            C$m
                               Companies — a provider of corrections,             Non–Executive Director of Sonae Sierra SGPS.
                               education, rehabilitation and treatment                                                               Office                               9.6         9.7                8.2            8.3             3         116.6                  246.7          363.3
                               services for adults and youth. Earlier, he held                                                       Retail                             33.5        39.3                6.3            7.4            33         530.8                  493.9        1,024.7
                               executive positions with FTI Palladium Partners,   Executive Directors                                Residential                        13.4        15.5                8.4            9.7             8         160.3                   18.0          178.3
                               Sandhurst Capital, Starwood Hotels & Resorts       6 Andrew Bibby (Chief Executive) joined            Hotel                               2.5         2.5               16.0           16.0             1          15.6                   46.9           62.5
                               Worldwide, GE Capital Services, Sequa              Grosvenor in 1984. He is a past Director           Industrial                          7.0         7.8                5.5            6.1             1         127.4                      —          127.4
                               Corporation, McKinsey & Company and JP             of the Real Property Association of Canada
                               Morgan. A citizen of both the USA and the UK,                                                                                            66.0        74.8                6.9             7.9           46         950.7                  805.5         1,756.2
                                                                                  and a past member of the Faculty Advisory
                               he chairs the non–profit Mega–Cities Project,                                                          Managed by Grosvenor Americas                                                                    44         916.5                  668.8        1,585.3




                                                                                                                                                                                                                                                                                                  Grosvenor Americas
                                                                                                                                                                                                                                                                                                  Investment and development
                                                                                  Board of the Sauder School of Business at
                               focused on urban development issues in the         the University of British Columbia.                Managed by Grosvenor Fund Management                                                              2          34.2                   136.7         170.9
                               world’s largest cities.
                                                                                                                                                                                                                                      46         950.7                  805.5         1,756.2
                                                                                  7 Rekha Patel CPA (Finance Director) joined
                               3 John T. Roberts, Jr. has more than 20 years      Grosvenor in 2003 following 12 years with the
                               of experience in the commercial real estate        real estate investment arm of GIC Real Estate,
                               industry, having served most recently as                                                              Development and trading properties
                                                                                  the Singaporean sovereign wealth fund. She is
                               President of AMB Capital Partners LLC, based in    a member of Commercial Real Estate Women.                                                                                                                    Values
                               San Francisco, CA. Before that, he served as
                                                                                                                                                                                                                                                                          Future
                               Senior Vice President and Director of Capital                                                                                                                                      Number of     Grosvenor          Third            development    Assets under
                               Markets for AMB Property Corporation, the                                                                                                                                          properties        share          party            commitment     management
                                                                                                                                                                                                                                     C$m            C$m                     C$m            C$m
                               parent company of AMB Capital Partners.
                               Earlier in his career, he held positions at                                                           Retail                                                                                2         12.1          12.2                    1.9          26.2
                               Ameritech Pension Trust in Chicago, IL, Richard                                                       Residential                                                                           6        50.3             —                    29.7          80.0
                               Ellis, Inc. in Washington, DC, and LJ Hooker
                               International Realty in Washington, DC.                                                               Managed by Grosvenor Americas                                                         8        62.4           12.2                   31.6         106.2


                                                                                                                                     Geographic analysis
                                                                                                                                                                                                                                                               Grosvenor share
                                                                                                                                                                                                                                                                       Financial
                                                                                                                                                                                                                                Investment   Development                  assets          Total
                                                                                                                                                                                                                                      C$m           C$m                     C$m           C$m

                                                                                                                                     USA                                                                                          683.4            11.3                    7.4         702.1
                                                                                                                                     Canada                                                                                       267.3            51.1                    7.0         325.4
                                                                                                                                                                                                                                  950.7           62.4                    14.4       1,027.5

                               1                                 2                                 3




                               4                                 5                                 6




                               7
Grosvenor Annual Report 2010                       Investment and development – Grosvenor Americas                 42      Grosvenor Annual Report 2010                       Investment and development – Grosvenor Americas                                            43
www.grosvenor.com                                                                                                          www.grosvenor.com



GROsvEnOR
AmERIcAs
pROpERTy
pORTFOlIO
continued




Property                             Description                                       Location                  Area m2   Property                             Description                                               Location                   Area m2

Investment properties — directly owned                                                                                     Investment properties — held in joint ventures (continued)
Retail                                                                                                                     Residential
DVC Plaza                           Community shopping centre                          Pleasant Hill, CA, USA   18,100     Ascent                               90–unit apartment community                               Kirkland, WA, USA          7,000
Hamilton Marketplace                Grocery–anchored, community shopping centre        Novato, CA, USA           8,400     Northshore Townhouses                86–unit apartment community                               Kenmore, WA, USA          12,000
La Colonnade                        Three–storey mixed–use building with retail                                            Sancerre                             140–unit apartment community                              Kirkland, WA, USA         10,500
                                    and office space                                    Beverly Hills, CA, USA    2,300     West Ridge Apartment Homes           239–unit apartment community                              Seattle, WA, USA          21,900
Los Gatos Village Square            Two–storey grocery–anchored community shopping                                         Woodcreek Apartment Homes            164–unit apartment community                              Lynwood, WA, USA          15,000
                                    centre with retail and shopping space              Los Gatos, CA, USA        4,300     Mixed–use
Venator Building                    Urban retail building                              Calgary, AB, Canada       2,300     180 Post Street                      Three–storey mixed–use building with
Westgate West                       Community shopping centre                          San Jose, CA, USA        21,900                                          retail and office space                                    San Francisco, CA, USA     2,700
Residential                                                                                                                185 Post Street                      Six–storey mixed–use redevelopment




                                                                                                                                                                                                                                                                                 Grosvenor Americas
                                                                                                                                                                                                                                                                                 Investment and development
BluWater                            152–unit apartment community                       Silver Lake, WA, USA     13,000                                          with retail and office space                               San Francisco, CA, USA     1,900
Chelsea at Juanita Village          196–unit apartment community                       Kirkland, WA, USA        16,700     251 Post Street                      Six–storey mixed–use building with
Peloton                             150–unit apartment community                       Redmond, WA, USA         11,800                                          retail and office space                                    San Francisco, CA, USA     3,100
Industrial                                                                                                                 The RISE                             Mixed–use shopping centre development
Annacis Business Park               Warehouse and distribution park                    Vancouver, BC, Canada    83,100                                          with 92 live–work rental lofts                            Vancouver, BC, Canada     26,400
Investment properties — held in joint ventures
Hotel
Courtyard by Marriott Chevy Chase 226–room hotel                                       Chevy Chase, MD, USA      7,000     Property                             Description                                               Location                   Area m2   Completion date
Office                                                                                                                      Principal development and trading properties — directly owned
Carlyle Gateway I & II               Two six–storey office buildings with ground floor                                       Residential
                                     retail and parking                                Alexandria, VA, USA      23,200     Drake                              135–unit multi–family development in pre–sales phase        Calgary, AB, Canada       10,000             2013
1500 K Street                        11–storey historic office building with parking    Washington, DC, USA      22,900     Mixed–use
1701 Pennsylvania Avenue, N.W.       12–storey office building with ground floor                                             Ambleside                          Full waterfront block residential–retail rezoning in the    Vancouver, BC, Canada     25,000             2016
                                     retail and parking                                Washington, DC, USA      17,800                                        public process phase
Retail                                                                                                                     North 40                           32.5 acre phased mixed–use village development in the       Los Gatos, CA, USA       100,000     2014–2020
Broadmead Village Shopping Center Community shopping centre                            Saanich, BC, Canada      11,800                                        Specific Plan phase
Church Street Plaza                  Community lifestyle centre                        Evanston, IL, USA        16,500
Coventry Hills Shopping Center       Community shopping centre                         Calgary, AB, Canada      12,200
Dupont Circle properties             Six–building urban retail portfolio               Washington, DC, USA       9,000
Friendship Heights properties        Three–building urban retail portfolio             Washington, DC/                     Property                             Description                                               Location                   Area m2   Completion date

                                                                                       Chevy Chase, MD, USA     25,000     Principal development and trading properties — held in joint ventures
Frontier Drive Metro Center          Community shopping centre                         Springfield, VA, USA       9,800     Mixed–use
701 North Michigan Avenue            Ground floor retail located outside the                                                5th Avenue                         319–unit multi–family development featuring                                                             Not
                                     historic Allerton Hotel in Chicago                Chicago, IL, USA           2,100                                       two high–rise towers                                        Calgary, AB, Canada       30,300     determined
830 North Michigan Avenue            Six–storey urban retail building                  Chicago, IL, USA          11,600    District Condos                    125–unit mixed–use development with 1,800m2 of retail       Washington, DC, USA        11,100          2012
308–310 North Rodeo Drive            Urban retail building                             Beverly Hills, CA, USA     1,400    High Street                        88–unit mixed–use development with 1,000m2 of retail        Surrey, BC, Canada         9,000           2010
Old Town Alexandria properties       Two–building urban retail portfolio               Alexandria, VA, USA        3,000    140 West 15th Street               18–storey residential–retail building undergoing rezoning   Vancouver, BC, Canada     12,200      2014–2015
Rice Lake Square                     Nine–building community shopping centre           Wheaton, IL, USA         23,400
South Point Exchange                 Community shopping centre                         Surrey, BC, Canada       24,900
Union Street/Wales Alley             Two–building urban retail portfolio               Alexandria, VA, USA        1,200
WesTech Village Corner               Community shopping centre                         Silver Spring, MD, USA     3,900
Woodley Park properties              Three–building urban retail portfolio             Washington, DC, USA        5,100
                                                                                                           Grosvenor Annual Report 2010   Investment and development – Grosvenor continental Europe           45
                                                                                                           www.grosvenor.com



                                                                                                           GROsvEnOR                      We aim to gain indirect exposure to attractive
                                                                                                           cOnTInEnTAl                    markets in Continental Europe in two
                                                                                                           EuROpE                         ways: through our significant investment
                                                                                                                                          in Sonae Sierra – a shopping centre owner,
                                                                                                                                          developer and manager headquartered in
                                                                                                                                          Porto, which provides services to third parties
                                                                                                                                          as well as running a substantial proprietary
                                                                                                                                          portfolio – and via our co-investment in
                                                                                                                                          Grosvenor-managed funds.
                                                                                                                                          Grosvenor has been active in Continental
                                                                                                                                          Europe since 1996.
                                                                                                                                          In 2010, responsibility for our proprietary
                                                                                                                                          capital across the region sat with the Grosvenor
                                                                                                                                          Group and its Advisory Committee.




                                                                                                                                                                                                                   Grosvenor Continental Europe
                                                                                                                                                                                                                   Investment and development
                                                                                                           highlights                     number of assets at each property location
                                                                                                           Grosvenor Continental Europe   Grosvenor Continental Europe



                                                                                                           3.1%
                                                                                                                                           Continental Europe
                                                                                                                                           A Germany        3

                                                                                                                                            B Greece        3
                                                                                                           Total returns
                                                                                                                                            C Italy         5
                                                                                                           2009 –3.1%



                                                                                                           €33.3m
                                                                                                                                           D Portugal      22                           A

                                                                                                                                            E Romania       3

                                                                                                                                            F Spain        12                                             E
                                                                                                           Revenue profit                                        D
                                                                                                                                           South America                                 C
                                                                                                           2009 €37.5m                                              F
                                                                                                                                              Brazil       13


                                                                                                                                                                                                      B

08:30 hours Brandenburg Gate, Berlin, Germany
In Berlin, Sonae Sierra decided to sell part of its holding in the Alexa centre, in line with its policy
of recycling capital for future growth.
Grosvenor Annual Report 2010           Investment and development – Grosvenor Continental Europe                          46      Grosvenor Annual Report 2010                                                                   Investment and development – Grosvenor Continental Europe                                                                   47
www.grosvenor.com                                                                                                                 www.grosvenor.com


Grosvenor’s share of property assets   Our performance in Continental Europe        Sonae Sierra also expanded Parque D
                                       reflects, above all, the performance of       Pedro in Campinas–São Paulo, Brazil           LeiriaShopping
By sector €m                           our investment in Sonae Sierra. It has       (see opposite).                               City:                      Leiria
                                       proved very resilient in the face of the
                                                                                    It started construction of Boulevard          Country:                   Portugal
                                       pressures in its markets, having taken
                                                                                    Londrina Shopping, in Paraná, Brazil,         Sector:                    Retail
                                       the right action at the right time before
                                                                                    opening in 2012; and Uberlândia               Type:                      Investment
                                       the financial crisis deepened.
                                                                                    Shopping, in Triângulo Mineiro, Brazil,
                                                                                                                                  Area:                      44,300m2
                                                                                    opening in 2011.
                                       Key performance indicators                                                                 Ownership:                 Sonae Sierra
                                       Total return increased to 3.1%               At the year end, Sonae Sierra’s
                                       (2009: –3.1%), reflecting positive            development pipeline included three           This new centre, representing an investment
                                       valuation movement in 2010.                  projects on site, with several projects in    of €79m and comprising 116 shops —
                                                                                                                                  international, national and local brands,
                                       Revenue profit was down at €33.3m             pre–development stages. Its track record      19 restaurants and 1,980 free car parking
                                       (2009: €37.5m), which reflects the            in development was again recognised in        spaces, was 100% let when it opened in
   O ce                                more challenging trading conditions.         a number of industry awards.                  March 2010.
   €95.6m                     4.9%     Assets under management (excluding
                                                                                    Sonae Sierra’s strategy of expanding
   Retail                              our investment in Grosvenor funds)
                                                                                    fee–paying services has been very
   €1,845.2m                95.1%      in aggregate were little changed at
                                                                                    successful. It now provides development
                                       €1,777m (2009: €1,857m), this slight
                                                                                    services to third parties and manages
By region €m                           reduction mirroring the general
                                                                                    shopping centres on behalf of other
                                       trend in market values.
                                                                                    companies in a combined total of seven




                                                                                                                                                                                  TE
                                                                                    countries.




                                                                                                                                                                               OES




                                                                                                                                                                                                             TE
                                                                                                                                                                            N109
                                       The market in 2010




                                                                                                                                                                                                          NOR
                                                                                                                                                                          A DO
                                       Retail demand remained resilient             Sonae Sierra’s environmental




                                                                                                                                                                                                        A DO
                                                                                                                                                                       RAD
                                                                                                                                                                   -EST




                                                                                                                                                                                                 -ESTRAD
                                       in Continental Europe, despite the           performance continues to impress:




                                                                                                                                                               AUTO
                                       well–publicised economic difficulties.        see our Environment Review (see




                                                                                                                                                                                            AUTO
                                                                                    www.grosvenor.com).




                                                                                                                                                               N10



                                                                                                                                                                                       N1
                                       The gap between the best and the




                                                                                                                                                                  9
                                       worst–performing assets in the market
                                                                                    Our portfolio
                                       continues to deepen: it is more




                                                                                                                                                                                                 AUTO
                                                                                                                                                         E
                                                                                    Sonae Sierra sold a 45% stake of the




                                                                                                                                                       ST
                                                                                                                                             42




                                                                                                                                                     OE
                                       pronounced than before the crisis.                                                                  N2




                                                                                                                                                                                                     -ESTRADA
                                                                                                                                                  DO
                                                                                    Alexa centre, Berlin, Germany, which




                                                                                                                                                 A




                                                                                                                                                                                                                          N1
                                                                                                                                               AD




                                                                                                                                                                                                                            13
                                                                                                                                             TR
                                                                                    it owned jointly with Foncière Euris/




                                                                                                                                                               N1
                                                                                                                                          -ES




                                                                                                                                                                                                              DO NO RT
   Portugal                            Strategy




                                                                                                                                        TO
                                                                                    Rallye, to Union Investment; Sonae Sierra




                                                                                                                                      AU
   €728.2m                  37.6%      Sonae Sierra, owned 50% by a




                                                                                                                                                                                                                                                                                                                                                                         Grosvenor Continental Europe
                                                                                                                                                                                                                                                                                                                                                                         Investment and development
                                                                                                                                                                                                                      E
                                                                                    retains a 9% holding and continues
   Spain                               Grosvenor–controlled company and 50%
                                                                                    to manage the asset. It also sold its share
   €436.5m                  22.5%      by Portuguese conglomerate Sonae
                                                                                    of a stake in the Mediterranean Cosmos                                                                                                                                              Parque D Pedro Shopping
   Brazil                              SGPS, is a specialist European and
                                                                                    Shopping Centre, Thessaloniki, Greece,                                                                                                                                              City:                                     Campinas
   €247.0m                  12.7%      Brazilian shopping centre developer,
                                                                                    jointly held with Acropole Charagionis,                                                                                                                                             Country:                                  Brazil
                                       investor and manager. It is active in 43
   Italy                                                                            to Lamda Developments SA.
   €182.3m                    9.4%     cities in Brazil, Germany, Greece, Italy,                                                                                                                                                                                        Sector:                                   Retail
                                       Portugal, Romania and Spain. It owns         The company won several industry                                                                                                                                                    Type:                                     Investment
   Germany
   €161.4m                    8.3%     51 shopping centres, and manages
                                       2,220,000m2 of gross lettable area
                                                                                    awards for centre refurbishments.                                                                                                                                                   Area:                                     122,000m2
   France                                                                           Occupancy rates across the Sonae Sierra                                                                                                                                             Ownership:                                Sonae Sierra
                              6.1%     governed by 8,521 lease contracts.
   €119.1m                                                                          portfolio were 96.3% (2009: 94.5%).
                                                                                                                                                                                                                                                                        This centre was the first thematic shopping
   Romania                             At this stage in the cycle, Sonae Sierra’s                                                                                                                                                                                       centre in Brazil. The €9.1m extension, opened
   €37.9m                     2.0%     strategy is to recycle capital vigorously    Operational highlights                                                                                                                                                              in November 2010, adds a new boulevard
   Greece                              in its investment business, partnering       Fernando Guedes Oliveira succeeded                                                                                                                                                  of 34 new stores, bringing the total to
   €27.5m                     1.4%     where appropriate, to grow its               Alvaro Portela as Sonae Sierra’s Chief                                                                                                                                              410 stores. The associated landscaping
                                       development ‘pipeline’ and its shopping      Executive on 1 April 2010. José Baeta                                                                                                                                               included big, exuberant plants and reflecting
   Belgium                                                                                                                                                                                                                                                              pools. The centre attracts an average of 1.8m
   €0.9m                           —   centre management and development            Tomás succeeded João Pessoa Jorge
                                                                                                                                                                                                                                                                        visitors a month.
                                       services for third parties.                  as Chief Executive of the Brazilian
By activity €m                                                                      operation.
                                       Grosvenor also has complementary
                                       exposure to the major Continental
                                                                                    The outlook
                                       European economies via stakes in                                                                                                                                                                                                                                           RAL
                                                                                    We expect 2011 and 2012 to be very                                                                                                                                                                        PEDRO I –
                                                                                                                                                                                                                                                                                                        PISTA LATE
                                       several Grosvenor–managed funds                                                                                                                                                                                                               ROD. DOM
                                                                                    challenging economically. However,
                                       and a small number of proprietary
                                                                                    looking to the medium– and longer–




                                                                                                                                                                                                                                                                                                                                AV.
                                                                                                                                                                                                                                                                                                   AV. WA
                                       investments, whose asset management




                                                                                                                                                                                                                                                                                                                                    GUIL
                                                                                                                                                                                                                                                                         R. M
                                                                                    term, Sonae Sierra’s proven strategy,




                                                                                                                                                                                                                                                                            R. R




                                                                                                                                                                                                                                                                                                                                        HER
                                                                                                                                                                                                                                                                             Q
                                       we outsource to Grosvenor Fund




                                                                                                                                                                                                                                                                                                         GNER SA
                                                                                                                                                                                                                                                                              DE

                                                                                                                                                                                                                                                                                AM




                                                                                                                                                                                                                                                                                                                                           ME
                                                                                    of growing its proprietary business




                                                                                                                                                                                                                                                                                 VAL

                                                                                                                                                                                                                                                                                  ALH
                                       Management.




                                                                                                                                                                                                                                                                                                                                              CAM
                                                                                                                                                                                                                                                                                    ENÇ
                                                                                    and its third party services in emerging




                                                                                                                                                                                                                                                                                                                YAR
                                                                                                                                                                                                                                                                                     OO




                                                                                                                                                                                                                                                                                                                                                 POS
                                                                                                                                                                                                                                                                                       A

                                                                                                                                                                                                                                                                                         RTI
                                                                                    economies as well as its more mature




                                                                                                                                                                                                                                                                                            GÁO
                                       Property highlights
                                                                                    markets, promises to ensure continued                                                                                                                                                                      I
                                       In 2010, Sonae Sierra opened its                                                                                                                                                                                                                  CAZ
                                                                                                                                                                                                                                                                                            OTT
                                                                                    steady growth.                                                                                                                                                                                   GOS
                                                                                                                                                                                                                                                                                                                                                              R. HE
                                                                                                                                                                                                                                                                                                                                                                   RMA
                                       51st proprietary shopping centre.                                                                                                                                                                                                     R. D
                                                                                                                                                                                                                                                                                 OMIN
                                                                                                                                                                                                                                                                                                 R. M
                                                                                                                                                                                                                                                                                                     Q. D
                                       LeiriaShopping, Leiria, Portugal (see                                                                                                                                                                                                                             E




                                                                                                                                                                                                                                                                                     R. P
                                                                                                                                                                                                                                                                                                                       ABR
   Investment                                                                                                                                                                                                                                                                                                             ANT
                            90.7%                                                                                                                                                                                                                                                                                            ES




                                                                                                                                                                                                                                                                                         EDR
   €1,760.9m                           opposite). It has now been sold to the




                                                                                                                                                                                                                                                                                                                                                       AV
                                                                                                                                                                                                                                                                                            OV




                                                                                                                                                                                                                                                                                                                                                         .G
                                                                                                                                                                                                                                                                                                                                                           UIL
                                                                                                                                                                                                                                                                                              IEIR
                                       Sierra Portugal Fund, for €92m, but is




                                                                                                                                                                                                                                                                                                                                                              HE
   Development




                                                                                                                                                                                                                                                                                                  AD




                                                                                                                                                                                                                                                                                                                                                                RM
                              9.3%




                                                                                                                                                                                                                                                                                                                        AV
                                       still managed by Sonae Sierra.




                                                                                                                                                                                                                                                                                                    E SI
   €179.9m




                                                                                                                                                                                                                                                                                                                                                                  EC
                                                                                                                                                                                                                                                                                                                          .GR
Grosvenor Annual Report 2010   Investment and development – Grosvenor continental Europe                                      48     Grosvenor Annual Report 2010                      Investment and development – Grosvenor continental Europe                                                  49
www.grosvenor.com                                                                                                                    www.grosvenor.com



GROsvEnOR                      1 Mark Preston MRICS (Group Chief Executive)
                               joined Grosvenor in the UK 1989. Seconded to
                                                                                   4 Richard Barkham PH.D MRICS is Group
                                                                                   Research Director, having been Research           GROsvEnOR
cOnTInEnTAl                    Hong Kong in 1995, he returned to lead our
                               fund management operations in 1997, spent
                                                                                   Director for Grosvenor Britain & Ireland from
                                                                                   2000 to 2005. Previously, he was with CBRE
                                                                                                                                     cOnTInEnTAl
EuROpE                         four years in San Francisco from 2002, became       in their investment research team and, before     EuROpE
ADvIsORy                                                                                                                             pROpERTy
                               Chief Executive of Grosvenor Britain & Ireland      that, spent 14 years as an academic at the
                               in 2006 and Group Chief Executive in 2008.          University of Reading. He has written numerous
cOmmITTEE                      He is on the Board of the Association of Foreign
                               Investors in Real Estate and a member of the
                                                                                   papers on real estate economics and a book on
                                                                                   regional economic development.                    pORTFOlIO
During 2010*                   North West Business Leaders’ Team. He is a
                               Non–Executive Director of Sonae Sierra SGPS.        5 Nicholas Scarles FCA CPA ATTORNEY AT LAW
                                                                                   (Group Finance Director) joined Grosvenor
                               2 Neil Jones MRICS is Managing Director of          in 2004. He was previously at Centrica,
                               Almacantar. He has been a Non–Executive             Price Waterhouse, and Coopers and Lybrand.
                               Director of Sonae Sierra SGPS since 1999.           He is a Governor of the Haberdashers’ Elstree     Investment properties
                               He was Chief Executive of Grosvenor                 Schools, Member of the Court of Assistants
                                                                                                                                                                                               Gross yields                                                        Values
                               Continental Europe from 1997 to 2009                of the Haberdashers Livery Company and a
                                                                                                                                                                            Passing                           Running    Reversionary    Number of    Grosvenor                    Third   Assets under
                               and an Executive Director of Grosvenor’s            Non–Executive Director of Sonae Sierra SGPS.                                                rent          ERV                 yield           yield   properties       share                    party   management
                               Group Board. He has been based in Paris                                                                                                          €m            €m                    %               %                       €m                       €m             €m
                               since 1998 and has also lived and worked
                               in London, Brussels and Hong Kong.                 *As of 1 January 2011, the Holding Company         Office                                     1.1           1.0                 6.3             5.7            2         17.6                  142.3          159.9
                                                                                   assumed direct responsibility for managing        Retail                                 105.0          113.7                 6.0             6.5          134      1,743.3                  443.6        2,186.9
                               3 Bernado Sanchez Incera is Deputy Chief            not only Grosvenor’s investment in Sonae                                                  106.1         114.7                 6.0             6.5          136     1,760.9                   585.9        2,346.8
                               Executive Officer of Société Générale.               Sierra but also Grosvenor’s co–investment
                               Previously, he had been Managing Director           capital in Grosvenor–managed funds.               Managed by Grosvenor Continental Europe                                                                   51      1,631.9                      —         1,631.9
                               at Vivarte France, Chairman Europe at LVMH         ‘Grosvenor Continental Europe’ therefore           Managed by Grosvenor Fund Management                                                                      85        129.0                  585.9           714.9
                               Fashion Group, International Managing               ceased to exist as part of the Group structure.                                                                                                            136     1,760.9                   585.9        2,346.8
                               Director of Inditex, with the Crédit Lyonnais       See Chief Executive’s review, page 12.
                               Group as Managing Director of the Chase–
                               Banque of Commerce, Managing Director
                               of the Banca Jover and CEO of Monoprix.                                                               Development and trading properties
                               He was a Non–Executive Director of Grosvenor                                                                                                                                                                                        Values
                               Continental Europe from 2008 to 2009.                                                                                                                                                                                                              Future
                                                                                                                                                                                                                                         Number of    Grosvenor             development    Assets under
                                                                                                                                                                                                                                         properties       share             commitment     management
                                                                                                                                                                                                                                                            €m                       €m             €m

                                                                                                                                     Office                                                                                                      1         78.0                      —            78.0
                                                                                                                                     Retail                                                                                                    10        101.9                    43.2          145.1




                                                                                                                                                                                                                                                                                                          Grosvenor Continental Europe
                                                                                                                                                                                                                                                                                                          Investment and development
                                                                                                                                                                                                                                                11       179.9                    43.2          223.1
                                                                                                                                     Managed by Grosvenor Continental Europe                                                                   10        101.9                    43.2          145.1
                                                                                                                                     Managed by Grosvenor Fund Management                                                                       1          78                       —            78.0
                                                                                                                                                                                                                                                11       179.9                    43.2          223.1


                                                                                                                                     Geographic analysis
                                                                                                                                                                                                                                                                       Grosvenor share
                                                                                                                                                                                                                                                      Investment            Development           Total
                                                                                                                                                                                                                                                             €m                     €m             €m

                                                                                                                                     Portugal                                                                                                           716.5                      11.7        728.2
                                                                                                                                     Spain                                                                                                              357.1                     79.4         436.5
                                                                                                                                     Brazil                                                                                                             224.3                     22.7         247.0
                                                                                                                                     Italy                                                                                                              157.9                     24.4         182.3
                               1                                 2                                  3                                Germany                                                                                                            157.4                      4.0         161.4
                                                                                                                                     France                                                                                                              119.1                       —          119.1
                                                                                                                                     Romania                                                                                                              14.7                    23.2          37.9
                                                                                                                                     Greece                                                                                                               13.0                    14.5           27.5
                                                                                                                                     Belgium                                                                                                               0.9                       —            0.9
                                                                                                                                                                                                                                                      1,760.9                    179.9       1,940.8

                               4                                 5                                                                   Grosvenor Continental Europe controls a 50% interest in Sonae Sierra SGPS. All other investments, including the co–investments in Grosvenor–
                                                                                                                                     managed funds, are managed by Grosvenor Fund Management.
                                                                                                                Grosvenor Annual Report 2010   Investment and development – Grosvenor Asia pacific       51
                                                                                                                www.grosvenor.com



                                                                                                                GROsvEnOR                      Grosvenor Asia Pacific’s aim is two-fold:
                                                                                                                AsIA pAcIFIc                   firstly, to build a luxury residential brand
                                                                                                                                               under the Grosvenor banner, differentiated by
                                                                                                                                               the quality, imagination and internationalism
                                                                                                                                               of its design; secondly, to grow a diversified
                                                                                                                nicholas loup
                                                                                                                                               portfolio of core investments in this and other
                                                                                                                Chief Executive                sectors, establishing long-term co-investment
                                                                                                                                               relationships into and out of the region.
                                                                                                                                               We have four offices in Asia Pacific: we opened
                                                                                                                                               in Hong Kong in 1994, in Tokyo in 2001, in
                                                                                                                                               Shanghai in 2004 and in Beijing in 2010.
                                                                                                                                               In the region, we have a team of 44 people.
                                                                                                                                               They are led by Nick Loup, Chief Executive,
                                                                                                                                               who started the business in 1994.




                                                                                                                                                                                                              Grosvenor Asia Pacific
                                                                                                                                                                                                              Investment and development
                                                                                                                highlights                     number of assets at each property location
                                                                                                                Grosvenor Asia Pacific          Grosvenor Asia Pacific



                                                                                                                3.9%
                                                                                                                                                China
                                                                                                                                                 A Hong Kong   2

                                                                                                                                                 B Shanghai    2
                                                                                                                Total returns                                                                            D
                                                                                                                2009 12.8%                      Japan                                                C



                                                                                                                HK$96.1m
                                                                                                                                                 C Osaka       1

                                                                                                                                                 D Tokyo       3
                                                                                                                                                                                               B

                                                                                                                Revenue profit
                                                                                                                2009 HK$107.6m loss

                                                                                                                                                                                      A


09:17 hours lu Jia Zui, pudong, shanghai, china
Shanghai is amongst the Asian cities on the Pacific Rim that we are targeting for our multi-region residential
development partnership, signed in 2010.
Grosvenor Annual Report 2010           Investment and development – Grosvenor Asia pacific                                  52      Grosvenor Annual Report 2010          Investment and development – Grosvenor Asia pacific                                                                53
www.grosvenor.com                                                                                                                   www.grosvenor.com


Grosvenor’s share of property assets   The Chinese economy again performed             Plaza retail mall in Shanghai (see
                                       strongly in 2010, supporting our strategy       pages 64 and 65) for the Grosvenor           PCCW Tower                                                                                         ISLA
                                                                                                                                                                                                                                           ND E
By sector HK$m                         for growth in Grosvenor Asia Pacific.            Vega–China Retail Fund.                                                                                                                JAVA
                                                                                                                                                                                                                                   ROAD
                                                                                                                                                                                                                                               AS
                                                                                                                                                                                                                                                 TE                                  SSI
                                                                                                                                                                                                                                                                                        NG
                                                                                                                                    City:         Hong Kong               Island East is Hong Kong’s largest                 KING
                                                                                                                                                                                                                                                   RN
                                                                                                                                                                                                                                                      CO                         RC
                                                                                                                                                                                                                                                                                   RO
                                                                                                                                                                                                                                 ’S RO                  RR                     OU
                                                                                                                                                                          privately–owned commercial hub and the                                          IDO                RB




                                                                                                                                                                                                                                                HOI
                                                                                       We actively support ANREV, the Asian         Country:      China                                                                               AD
                                                                                                                                                                                                                                                             R
                                                                                                                                                                                                                                                                         RN
                                                                                                                                                                                                                                                                           HA
                                       Key performance indicators




                                                                                                                                                                                                                                                    CHA
                                                                                                                                                                          PCCW Tower will be one of our core assets                                                   STE
                                                                                                                                                                                                                                                                    EA
                                                                                       association for investors in non–listed




                                                                                                                                                                                                                                                       K ST
                                       Revenue profit went into the black                                                            Sector:       Office                   in the city, with excellent long–term growth                                                    EAST
                                                                                                                                                                                                                                                                              ERN
                                                                                                                                                                                                                                                                                  HARB




                                                                                                                                                                                                                                                           REET
                                                                                       real estate vehicles, which promotes         Type:         Investment              prospects. This major core office purchase
                                                                                                                                                                                                                                                                                      OUR
                                                                                                                                                                                                                                                                                          CROS
                                       at HK$96.1m (2009: HK$107.6m loss)                                                                                                                                                                                                                     SING
                                                                                       industry best practice standards and                                               signifies our continued interest in this market.
                                       and assets under management                                                                  Area:         57,600m2
                                                                                       transparency.




                                                                                                                                                                                                                                                      KING
                                                                                                                                                                          Our approach to property is similar to                      QUARRY
                                       (excluding investment in Grosvenor                                                           Ownership:    Held in joint venture                                                               BAY                                   TAI KOO WAN ROAD




                                                                                                                                                                                                                                                          ’S RO
                                                                                                                                                                          that of our joint venture partners, Swire
                                       funds) increased slightly to HK$5,647m




                                                                                                                                                                                                                                                               AD
                                                                                       Property highlights                                                                Properties, who are known for their long–term                                                     TAI KOO SHING ROAD
                                       (2009: HK$5,564m). Total returns                                                                                                   vision. It is our first partnership with them.
                                                                                       The development highlight was the launch                                                                                                                                              TAI KOO
                                       dropped to 3.9% (2009: 12.8%) because                                                                                                                                                                                               KORNHILL ROAD
                                                                                       of the Penthouse at The Westminster
                                       of lower disposal profits and capital
                                                                                       Terrace in Hong Kong, our joint venture
                                       growth.
                                                                                       project with Asia Standard International
   O ce                                                                                Group Limited. At 600m2, it is one of the
   HK$2,919.4m              59.7%      The market in 2010
                                                                                       largest penthouses in the city. We also
   Retail                              The Chinese economy continued to
                                                                                       sold a further 20 units at this property.
   HK$331.2m                 6.8%      grow strongly, with GDP rising to 10.3%
   Residential
                                       and the long–term outlook is good:              For our investment portfolio we
   HK$1,642.5m              33.5%      China now has the second largest                acquired a 50% interest in the HK$4.4bn
                                       economy and stock market in the world.          PCCW Tower, Island East, Hong Kong
By region HK$m
                                                                                       (see opposite).
                                       Japan had a better year than expected,
                                       with GDP growing by 3.9%, although
                                                                                       Our portfolio
                                       it tailed off in the latter half of the year.
                                                                                       Our first Chinese assets completed
                                       The property market began to recover.
                                                                                       their passage through the investment
                                       Across the region, interest in luxury           cycle, meeting the exacting standard for
                                       purchases continues: Asia already accounts      asset sales. We had acquired Grosvenor                                                                                                                                                                                                     VICT


                                       for 65% of the global luxury goods              Place, Lakeville Regency and Belgravia
                                       market.                                         Place, Hua Shan in 2007 and 2008
                                                                                       respectively, and in each case refurbished
                                       Strategy                                        the assets and managed them successfully
                                       The Group resolved to bring the weighting       before completing their sale in 2010.
                                       to Grosvenor Asia Pacific up to 9.1%.
   Hong Kong                                                                           Occupancy rates were 91% across the
   HK$2,556.6m              52.2%      We are ‘stretching’ our proprietary             portfolio (2009: 85%).
   China                               capital through strategic partnerships.
   HK$591.3m                12.1%      In 2010, we committed to a multi–region         Operational highlights
   Japan
                                       partnership for the development of              We opened a Beijing office in September
   HK$1,745.2m              35.7%      high–end residential properties around          2010.
                                       the Pacific Rim with a sovereign wealth
                                                                                       We announced the promotion of Koshiro
By activity HK$m
                                       fund, alongside our colleagues in
                                                                                       Hiroi to the role of Managing Director,
                                       Grosvenor Americas and Grosvenor
                                                                                       Chief Representative Japan, based in




                                                                                                                                                                                                                                                                                                     Grosvenor Asia Pacific
                                                                                                                                                                                                                                                                                                     Investment and development
                                       Australia. The Asia region accounts for
                                                                                       Tokyo, effective on 1 January 2011 when
                                       50% of the total investment.
                                                                                       he joined our Board. Koshiro will focus
                                       Development and refurbishment activity          on our proprietary activities there,
                                       focuses on luxury residential projects          pursuing opportunities for residential
                                       that will build our brand in the region.        development and core investments.
                                       We are growing our investment
                                       portfolio, seeking opportunities in             The outlook
                                       Beijing and Shanghai — mainly retail;           In the medium– if not the short–term,
                                       Hong Kong — mainly offices; and Tokyo            Chinese growth will be firmly underpinned
                                       — residential, retail and office.                by the rapid pace of urbanisation and
   Investment                                                                          consumerism: over the next decade,
                                       At 31 December 2010, 95% of our
   HK$4,660.8m              95.3%      capital was in investment assets and
                                                                                       22m people are expected to move into
   Development                                                                         cities every year and the retail market is
                                       5% in development projects. Long–term,
   HK$232.3m                  4.7%     we expect to have 70% of our capital in
                                                                                       expected to overtake that of the US. At
                                                                                       the same time, we expect the pace and
                                       investment assets; 30% in development
                                                                                       scale of China’s investment in overseas
                                       activities.
                                                                                       markets to grow significantly.
                                       We maintained our co–investment in
                                                                                       We share the world's concern for the
                                       four Grosvenor–managed funds and
                                                                                       safety and well-being of the affected
                                       provided professional services to
                                                                                       communities, following the 11 March
                                       Grosvenor Fund Management in each
                                                                                       earthquake and tsunami in Japan. The
                                       Asian market. In 2010, our acquisition
                                                                                       gradual economic recovery that had
                                       team, working with our colleagues in
                                                                                       been expected is likely to be delayed.
                                       Grosvenor Fund Management,
                                       exchanged contracts on the Parkside
Grosvenor Annual Report 2010   Investment and development – Grosvenor Asia pacific                                          54      Grosvenor Annual Report 2010                       Investment and development – Grosvenor Asia pacific                                                            55
www.grosvenor.com                                                                                                                   www.grosvenor.com



GROsvEnOR                      Non–Executive Directors                            6 Nicholas Scarles FCA CPA ATTORNEY AT LAW
                                                                                  (Group Finance Director) joined Grosvenor         GROsvEnOR
AsIA pAcIFIc                   1 Tim Freshwater (Chairman) is Vice Chairman
                               of Goldman Sachs Asia. From 2001 to 2004,
                                                                                  in 2004. He was previously at Centrica,
                                                                                  Price Waterhouse, and Coopers and Lybrand.
                                                                                                                                    AsIA pAcIFIc
BOARD OF                       he was Chairman of Investment Banking in
                               Asia. Prior to that, he was Chairman of
                                                                                  He is a Governor of the Haberdashers’ Elstree     pROpERTy
DIREcTORs                                                                                                                           pORTFOlIO
                                                                                  Schools, Member of the Court of Assistants
                               Jardine Fleming. Previously, he spent 29 years     of the Haberdashers Livery Company and a
                               with Slaughter and May. Tim is a director          Non–Executive Director of Sonae Sierra SGPS.
As at 17 March 2011            of several listed companies, including Swire
                               Pacific, and is a director of the Community
                               Chest of Hong Kong.                                Executive Directors
                                                                                  7 Nicholas Loup (Chief Executive) established
                               2 Kensuke Hotta is Chairman of Greenhill           the operation in Asia Pacific in 1994. He is
                               & Co. Japan Ltd. He served as Chairman             a Director of Asia Standard, a listed company
                               of Morgan Stanley Japan from 2001 to 2007.         in Hong Kong; a General Committee member          Investment properties
                               Prior to that, he was Deputy President of          of the British Chamber of Commerce and a
                               Sumitomo Bank and also worked for Japan’s          Director of the Spinal Cord Injury Fund.
                                                                                                                                                                                             Gross yields                                                           Values
                               Ministry of Finance for two years. He has          He is also Chairman of ANREV, of which he is a                                            Passing                         Running    Reversionary    Number of        Grosvenor                   Third
                               served as director or adviser for various                                                                                                       rent        ERV                 yield           yield   properties           share                   party             Total
                                                                                  founder member, and a member of the Asia                                                   HK$m         HK$m                    %               %                         HK$m                   HK$m              HK$m
                               institutions, universities and foundations.        Pacific acquisitions committee of the Tate.
                                                                                                                                    Office                                   129.7        134.2                 4.5             4.7           15         2,881.8                2,052.6          4,934.4
                               3 Michael Lee is Managing Director of              8 William Lo FCCA CFA (Finance Director) joined   Retail                                   18.6         18.7                 5.6             5.6            1           331.2                  331.2            662.4
                               MAP Capital Ltd. He is an independent Non–         Grosvenor in 2002, after 11 years with AIA        Residential                              77.9         89.0                 5.7             6.5           40         1,372.5                4,555.3          5,927.8
                               Executive Director of Chen Hsong Holdings Ltd,     Capital Corporation as finance director for the                                            226.2        241.9                 4.9             5.3           56         4,585.5                6,939.1          11,524.6
                               Hong Kong Exchanges and Clearing Ltd and           region and six years with Coopers and Lybrand
                               Trinity Ltd. He was Managing Director of Hysan     in Hong Kong.                                     Managed by Grosvenor Asia                                                                                 7         3,920.5                1,186.6           5,107.1
                               Development Company Ltd from 2003 to 2007                                                            Managed by Grosvenor Fund Management                                                                     49           665.0                5,752.5           6,417.5
                               and was appointed to the Board of Hysan as a       9 Mark Hahn MRICS (Director, Development,
                               Non–Executive Director in January 2010.                                                                                                                                                                       56         4,585.5                6,939.1          11,524.6
                                                                                  Greater China) joined Grosvenor in 2007. Since
                                                                                  2002, he had worked at Sino Land as Associate
                               4 Norman Lyle OBE is a Non–Executive Director      Director; prior to that, at DTZ Debenham Tie
                               of Standard Chartered Bank (HK) Ltd and                                                              Development properties
                                                                                  Leung as Head of Investments. He is a member
                               DohaLand Company. He was Group Finance             of the HKIS.                                                                                                                                                          Values
                               Director of Jardine Matheson Holdings Ltd                                                                                                                                                                                                           Future
                               until his retirement in 2005 and, prior to this,   10 Koshiro Hiroi (Managing Director, Chief                                                                                             Number of     Grosvenor            Third            development      Assets under
                               worked for Zeneca Group Plc and ICI Plc where                                                                                                                                             properties        share            party            commitment       management
                                                                                  Representative Japan) joined Grosvenor in                                                                                                                HK$m            HK$m                    HK$m              HK$m
                               he was Group Treasurer and worked in the UK,       2001 as Chief Representative and led the growth
                               Kenya and Malaysia.                                                                                  Residential — managed by Grosvenor Asia                                                       1       232.3           232.3                       —            464.6
                                                                                  of the business in Japan; he joined the Board
                                                                                  of Grosvenor Asia Pacific in January 2011.
                               5 Mark Preston MRICS (Group Chief Executive)       Before joining Grosvenor, he worked for
                               joined Grosvenor in the UK 1989. Seconded to                                                         Geographic analysis
                                                                                  American private fund Lone Star Group and
                               Hong Kong in 1995, he returned to lead our         Tokyo Tatemono in Japan.                                                                                                                                                   Grosvenor share
                               fund management operations in 1997, spent
                                                                                                                                                                                                                                                                                Financial
                               four years in San Francisco from 2002, became      11 John So CFA (Director, Investment, China)                                                                                                         Investment     Development                  assets             Total
                               Chief Executive of Grosvenor Britain & Ireland     joined Grosvenor in 2000 from Jardine Fleming                                                                                                             HK$m            HK$m                   HK$m              HK$m
                               in 2006 and Group Chief Executive in 2008.         Securities (HK), where he was a Director of the   Hong Kong                                                                                          2,249.0            232.3                    75.3          2,556.6
                               He is on the Board of the Association of Foreign   Regional Real Estate Research team. Over the      China                                                                                                 591.3              —                       —             591.3
                               Investors in Real Estate and a member of the       past 10 years, he has been responsible for
                               North West Business Leaders’ Team. He is a                                                           Japan                                                                                               1,745.2              —                       —           1,745.2
                                                                                  investments and fund management in Hong
                               Non–Executive Director of Sonae Sierra SGPS.       Kong, Japan and Singapore, with a more recent                                                                                                        4,585.5            232.3                    75.3          4,893.1




                                                                                                                                                                                                                                                                                                              Grosvenor Asia Pacific
                                                                                                                                                                                                                                                                                                              Investment and development
                                                                                  focus on Greater China Investment. He is a
                                                                                  Committee Member of ANREV.
                                                                                                                                    Property                             Description                                                   Location                                 Area m2

                                                                                                                                    Investment properties — directly owned
              1                2                                  3                                4                                Office
                                                                                                                                    Yoshiyasu–Kanda                     Office building in Chiyoda–ku                                   Tokyo, Japan                             5,000
                                                                                                                                    Shinsen Building                    Office building in Shibuya–ku                                   Tokyo, Japan                             2,800
                                                                                                                                    Residential
                                                                                                                                    Chester Court at Gubei              High–end serviced apartment building in Gubei                  Shanghai, China                        13,800
                                                                                                                                    Grosvenor Place at                  Three units in a luxury residential apartment
                                                                                                                                    Lakeville Regency                   building in Jingan                                             Shanghai, China                            970
              5                6                                  7                                8                                Investment properties — held in joint ventures
                                                                                                                                    Office
                                                                                                                                    PCCW Tower                           Office building in Quarry Bay                                  Hong Kong, China                       57,600
                                                                                                                                    Retail
                                                                                                                                    Nakaza Kuidaore                      Retail property in Chuo–ku                                    Osaka, Japan                             8,700
                                                                                                                                    Residential
                                                                                                                                    Grosvenor Place, Kamizono–cho        Residential property in Shibuya–ku                            Tokyo, Japan                            18,100
                               9                                  10                               11

                                                                                                                                    Property                             Description                                                   Location                                 Area m2     Completion date

                                                                                                                                    Development and trading properties — held in joint ventures
                                                                                                                                    Residential
                                                                                                                                    The Westminster Terrace            Residential development in Yan Kam Tau                          Hong Kong, China                       16,300                2009
                                                                                                          Grosvenor Annual Report 2010   Investment and development – Grosvenor Australia   57
                                                                                                          www.grosvenor.com



                                                                                                          GROsvEnOR                      Grosvenor Australia is a developer and
                                                                                                          AusTRAlIA                      investor in the office sector in the major cities,
                                                                                                                                         with a reputation for delivering the highest
                                                                                                                                         quality of buildings with best practice
                                                                                                                                         environmental ratings. Our aim is to become
                                                                                                          Rob Kerr
                                                                                                                                         a prominent developer in the residential sector
                                                                                                          Chief Executive                as well over the next five years.
                                                                                                                                         Grosvenor has been active in the Australian
                                                                                                                                         property market for 43 years. We have had
                                                                                                                                         an office in Sydney since 1968 and an office
                                                                                                                                         in Brisbane since 1992.
                                                                                                                                         Rob Kerr, our Chief Executive, has led
                                                                                                                                         our Australian business for ten years.
                                                                                                                                         He is supported by a team of 16 people.




                                                                                                          highlights                     number of assets at each property location
                                                                                                          Grosvenor Australia            Grosvenor Australia



                                                                                                          7.5%
                                                                                                                                          Australia
                                                                                                                                           A Brisbane   2

                                                                                                                                           B Sydney     4
                                                                                                          Total returns




                                                                                                                                                                                                    Grosvenor Australia
                                                                                                                                                                                                    Investment and development
                                                                                                          2009 –3.6%



                                                                                                          A$13.3m
                                                                                                          Revenue profit                                                                         A
                                                                                                          2009 A$30.4m




07:00 hours parramatta, sydney, Australia                                                                                                                                                   B

Parramatta continues to grow in importance as an economic and administrative hub: our office development
at Station Street will be our second in the area.
Grosvenor Annual Report 2010           Investment and development – Grosvenor Australia                                   58      Grosvenor Annual Report 2010                                                                                              Investment and development – Grosvenor Australia                                                                   59
www.grosvenor.com                                                                                                                 www.grosvenor.com


Grosvenor’s share of property assets   2010 was a year of growing momentum           We believe in working in partnerships
                                       for Grosvenor Australia and for the           and have begun our third joint venture        60 Station Street
By sector A$m                          market. The second half of the year saw       with Leighton Properties, in Parramatta,      City:                                                      Parramatta
                                       the start of a new commodity boom             Sydney (see below and opposite).
                                                                                                                                   Country:                                                   Australia
                                       fuelling the economy.                         Furthermore, we were delighted to
                                                                                     commit to a multi–region partnership for      Sector:                                                    Office
                                       Key performance indicators                    the development of high–end residential       Type:                                                      Development
                                       Our total return improved considerably        properties with a sovereign wealth fund,      Area:                                                      25,700m2
                                       to 7.5% (2009: –3.6%), reflecting solid        alongside our colleagues in Grosvenor         Ownership:                                                 Held in joint venture
                                       revenue profit, strict cost control and        Asia Pacific and Grosvenor Americas.
                                       an increase in asset valuations.              Grosvenor is a strong brand name and          This new development was 68% pre–committed
                                                                                     we aim to attract more of these               when we started construction in December.
                                       To increase our financial capacity,                                                          Deloitte and QBE Insurance are the confirmed
                                                                                     partnerships with investors, including
                                       we sold a number of non–core assets.                                                        tenants. (See also our Environment Review
                                                                                     one focused on office buildings.               2010 at www.grosvenor.com.)
                                       Revenue profit decreased to A$13.3m
   O ce                                (2009: A$30.4m), following high trading
   A$344.9m                 85.1%      profits in 2009, although net rental
                                                                                     Property highlights                           This is a computer–generated image.

   Industrial                                                                        We sold three assets during the year so
                                       income at A$22.4m (2009: A$24.4m)
   A$60.6m                  14.9%      remained strong. Assets under
                                                                                     we could recycle our capital: the office
                                                                                     building at 25 Smith Street, Parramatta,
                                       management increased to A$741m
By region A$m                                                                        Sydney, and two industrial buildings in
                                       (2009: A$663).
                                                                                     Sydney and Brisbane.                                                                                     MACQ
                                                                                                                                                                                                  UARIE




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                                                                                                                                           DEN S
                                       Our increased financial capacity means
                                                                                     We started construction in December at                         ARGY




                                                                                                                                       MARS
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                                       we are well placed to acquire investment
                                                                                     our latest ‘green’ office development, at
                                       and development opportunities in 2011.                                                                                                                                               ST
                                                                                     Station Street, Parramatta (see opposite),                                                                                      HASSAN




                                                                                                                                                                    CHURCH ST
                                                                                                                                                 CAMP
                                                                                     which is substantially pre–leased.                              BELL




                                                                                                                                                                                                        STATI
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                                       The market in 2010




                                                                                                                                                                                                             ON S
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                                       The economy continued to benefit from          At the close of the year, our only                    TERN




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                                       strong demand for natural resources           development exposure is to Station                           EARLY
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                                       in Australia’s export markets (most           Street.




                                                                                                                                                                           GREAT WESTE
                                                                                                                                                         E ST                                                                             WESTON S
                                       notably China and India), resulting in                                                                    LANSDOWN                                                              HARRIS PARK
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                                       rising business profits and low levels of      Our portfolio                                                                                                                                           CROWN ST




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                                                                                                                                   INKERMAN ST




                                                                                                                                                                                      RN HW
                                       unemployment. This translated into falling    We concluded a major lease renewal at                                    T                                                                       BRISBANE
   Queensland                                                                                                                                       ROSEHILL S




                                                                                                                                                                                   Y
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   A$336.0m                 82.9%      vacancy rates and improved prospects for      the Bank of Queensland Centre, Brisbane,                                         ST
                                                                                                                                                             BOUNDARY
                                       rental growth in all property sectors.        to the existing Federal Government
   New South Wales                                                                   tenant. At 400 George Street, Brisbane
   A$69.5m                  17.1%      The Australian banking sector remained
                                                                                     (see opposite), we let four of the six                                                                                                                                                                        400 George Street
                                       strong and business confidence continued
                                                                                     available floors at our target rents.                                                                                                                                                                          City:                      Brisbane
By activity A$m                        to rise. This led to a marked increase in
                                       activity with renewed investor interest       Occupancy rates across the portfolio                                                                                                                                                                          Country:                   Australia
                                       across all commercial sectors, prompted       averaged 85% (2009: 93%).                                                                                                                                                                                     Sector:                    Office
                                       by stabilising capital values, increased                                                                                                                                                                                                                    Type:                      Investment
                                       merger and acquisition activity and the       Operational highlights                                                                                                                                                                                        Area:                      66,000m2
                                       positive change in investor sentiment.        We appointed Jennifer Cooper, Head                                                                                                                                                                            Ownership:                 Held in joint venture
                                                                                     of Residential Development, to implement
                                       Strategy                                      our strategy for the residential sector.                                                                                                                                                                      We finished the year with all but two floors
                                       In 2010, we agreed our strategy for                                                                                                                                                                                                                         of this 34–storey office development leased
                                       residential development: we will focus        The outlook                                                                                                                                                                                                   to corporates, State and Federal Government
                                                                                                                                                                                                                                                                                                   departments. (See also the case study in our
                                       on middle–to high–end, medium–density         The increased activity in the second half                                                                                                                                                                     Environment Review at www.grosvenor.com.)
                                       projects located in Sydney, Melbourne and     of 2010 should set the scene for 2011:
                                       Brisbane, which have the largest markets.     strong economic growth is expected in
   Investment
   A$396.6m                 97.8%                                                    the next 12–18 months.
                                       We continue to focus on the office
   Development                         sector, where we have a strong track          In the medium– to longer–term, the
                               2.2%




                                                                                                                                                                                                                                                                                                                                                                                    Grosvenor Australia
                                                                                                                                                                                                                                                                                                                                                                                    Investment and development
   A$8.9m                              record and a portfolio of investment          prospects are also good: increasing
                                       and development assets. The buildings         demand for commodities underpins
                                       we develop are highly rated ‘green’           the Australian economy and, therefore,                                                                                                                                                                              ROMA                                       ST
                                                                                                                                                                                                                                                                                                              ST                               OT
                                       buildings as there is a strong demand         the property market, so we expect the                                                                                                                                                                                                                   RB
                                                                                                                                                                                                                                                                                                                                           TU




                                                                                                                                                                                                                                                                                                                                                                     ED
                                                                                                                                                                                                                                                                                                                                                                       WA
                                       from public and private occupiers,            office occupier market to expand and the




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                                       and from investors, for sustainability.       residential markets to gain momentum.




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                                       Our capabilities in this field, reinforced                                                                                                                                                                                                                                                                EL
                                                                                                                                                                                                                                                                                                                                                  AID
                                                                                                                                                                                                                                                                                                                                              AD
                                       by our principal sponsorship of Green




                                                                                                                                                                                                                                                                                                                                                              AL
                                       Cities — Australia’s premier sustainability




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                                       conference — ensure that Grosvenor                                                                                                                                                                                                                                                                                            ST




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                                       environmental best practice.




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Grosvenor Annual Report 2010   Investment and development – Grosvenor Australia                                              60    Grosvenor Annual Report 2010                       Investment and development – Grosvenor Australia                                                               61
www.grosvenor.com                                                                                                                  www.grosvenor.com



GROsvEnOR                      Non–Executive Directors                            Executive Directors                              GROsvEnOR
AusTRAlIA                      1 Charles Goode (Chairman) is Chairman of
                               Australian United Investment Company Ltd,
                                                                                  5 Rob Kerr FRICS FAPI (Chief Executive) joined
                                                                                  Grosvenor in 1994. He is a member of the         AusTRAlIA
BOARD OF                       Diversified United Investment Ltd and Flagstaff
                               Partners Pty Ltd. He has been Chairman of the
                                                                                  Property Council of Australia Capital Markets
                                                                                  Roundtable, Director of the Grosvenor ISPT
                                                                                                                                   pROpERTy
DIREcTORs                      Australia and New Zealand Banking Group Ltd
                               and Woodside Petroleum Ltd, and a Director
                                                                                  International Property Trust and a member of
                                                                                  the Australian Institute of Company Directors.
                                                                                                                                   pORTFOlIO
As at 17 March 2011            of Singapore Airlines Ltd. He has a wide range
                               of community interests which include serving       6 Ian Clark FCA FCIS (Finance Director) joined
                               as Chairman of The Ian Potter Foundation           Grosvenor 25 years ago after 10 years’
                               (founded by the late Australian financier,          experience in the accounting profession,
                               Sir Ian Potter, and now Australia’s largest        including five years with Price Waterhouse.
                               private philanthropic foundation).
                                                                                  7 Graham Livingstone MRICS (Director,            Investment properties
                               2 Stephen Lonie is a former Managing Partner       Development) joined Grosvenor in 1996
                               of KPMG Queensland. He practises as an             and has been Development Director since                                                                    Gross yields                                                          Values
                               independent management consultant and is           2007, and is responsible for our national                                                Passing                          Running    Reversionary    Number of      Grosvenor                    Third
                               also currently the Chairman of CS Energy Ltd,      development programme. Prior to that, he                                                    rent         ERV                 yield           yield   properties         share                    party             Total
                                                                                                                                                                             A$m           A$m                    %               %                        A$m                      A$m              A$m
                               The Rock Building Society, and Jellinbah           was the Queensland Director. He previously
                               Resources Pty Ltd. He is also a Trustee of the     worked in senior roles, as a consultant in       Office                                    26.0          32.0                 7.7             9.5                2     336.0                   166.0             502.0
                               Brisbane Grammar School Board of Trustees          Sydney, Australia, and Edinburgh, Scotland.      Industrial                                4.7           5.3                 7.8             8.7                3      60.6                    39.6             100.2
                               and an Adjunct Professor of the University of
                                                                                                                                   Managed by Grosvenor Australia           30.7          37.3                 7.7             9.4                5     396.6                   205.6             602.2
                               Queensland Business School.

                               3 Mark Preston MRICS (Group Chief Executive)
                                                                                                                                   Development properties
                               joined Grosvenor in the UK 1989. Seconded to
                               Hong Kong in 1995, he returned to lead our                                                                                                                                                                              Values
                               fund management operations in 1997, spent                                                                                                                                                                                                          Future
                               four years in San Francisco from 2002, became                                                                                                                                             Number of     Grosvenor           Third            development      Assets under
                                                                                                                                                                                                                         properties        share           party            commitment       management
                               Chief Executive of Grosvenor Britain & Ireland                                                                                                                                                               A$m             A$m                     A$m              A$m
                               in 2006 and Group Chief Executive in 2008.
                               He is on the Board of the Association of Foreign                                                    Office — Managed by Grosvenor Australia                                                         1         8.9              8.9                120.8             138.6
                               Investors in Real Estate and a member of the
                               North West Business Leaders’ Team. He is a
                               Non–Executive Director of Sonae Sierra SGPS.                                                        Geographic analysis
                                                                                                                                                                                                                                                                       Grosvenor share
                               4 Nicholas Scarles FCA CPA ATTORNEY AT LAW                                                                                                                                                                             Investment            Development              Total
                               (Group Finance Director) joined Grosvenor                                                                                                                                                                                    A$m                    A$m               A$m
                               in 2004. He was previously at Centrica,
                               Price Waterhouse, and Coopers and Lybrand.                                                          Queensland                                                                                                           336.0                        —            336.0
                               He is a Governor of the Haberdashers’ Elstree                                                       New South Wales                                                                                                       60.6                      8.9             69.5
                               Schools, Member of the Court of Assistants                                                                                                                                                                               396.6                      8.9            405.5
                               of the Haberdashers Livery Company and a
                               Non–Executive Director of Sonae Sierra SGPS.

                                                                                                                                   Property                             Description                                                    Location                                Area m2

                                                                                                                                   Investment properties — directly owned
                                                                                                                                   Office
                                                                                                                                   Bank of Queensland Centre           ‘A’ grade office building                                        Brisbane, Australia                   24,700
                                                                                                                                   Industrial
                                                                                                                                   153 Glendenning Road                One industrial distribution building                            Sydney, Australia                      6,500
                                                                                                                                   24 Cox Place                        Industrial distribution building                                Sydney, Australia                     10,000
                                                                                                                                   Investment properties — held in joint ventures
                               1                                 2                                 3                               Office
                                                                                                                                   400 George Street                    ‘A’ grade office building                                       Brisbane, Australia                   66,000
                                                                                                                                   Industrial
                                                                                                                                   Sir Joseph Banks Corporate Park      High–technology business park                                  Sydney, Australia                     31,600




                                                                                                                                                                                                                                                                                                             Grosvenor Australia
                                                                                                                                                                                                                                                                                                             Investment and development
                                                                                                                                   Property                             Description                                                    Location                                Area m2     Completion date
                               4                                 5                                 6
                                                                                                                                   Development and trading properties — held in joint ventures
                                                                                                                                   Office
                                                                                                                                   60 Station Street                  Office development with development                               Parramatta,                                                Not
                                                                                                                                                                      approval for 20–storey ‘A’ grade building                        Sydney, Australia                     25,700        determined



                               7
                                                                                                            Grosvenor Annual Report 2010   Grosvenor Fund management                                63
                                                                                                            www.grosvenor.com



                                                                                                            GROsvEnOR                      Grosvenor Fund Management offers
                                                                                                            FunD                           investors a unified approach to property
                                                                                                            mAnAGEmEnT                     fund management around the world.
                                                                                                                                           We aim to create value for our investors,
                                                                                                                                           our shareholders and our staff.
                                                                                                            Jeffrey weingarten
                                                                                                            Chief Executive
                                                                                                                                           Aligning our interests with our partners
                                                                                                                                           and building long-term relationships are
                                                                                                                                           of paramount importance to us: our longest
                                                                                                                                           investor relationship goes back to 1956.
                                                                                                                                           We launched our first fund in 1976 in
                                                                                                                                           the USA and formally set up Grosvenor
                                                                                                                                           Fund Management in 2005. We now have
                                                                                                                                           70 investor partners in 24 property funds
                                                                                                                                           and separate account mandates. Funds
                                                                                                                                           under management are £3.8bn.
                                                                                                                                           Our 135 staff, operating from offices in
                                                                                                                                           China, France, Italy, Japan, Luxembourg,
                                                                                                                                           Spain, the UK and the USA, have strong
                                                                                                                                           local property expertise coupled with fund
                                                                                                                                           management skills. They are led by Jeffrey
                                                                                                                                           Weingarten, who became Chief Executive
                                                                                                                                           in March 2011.




                                                                                                            highlights                     number of assets at each property location
                                                                                                            Grosvenor Fund Management      Grosvenor Fund Management



                                                                                                            £230m
                                                                                                                                            Fund Management
                                                                                                                                            A Asia           49

                                                                                                                                             B Continental   86
                                                                                                            Acquisitions of property           Europe
                                                                                                            2009 £36m                        C UK            19



                                                                                                            £3.8bn
                                                                                                                                            D USA            87                         C
                                                                                                                                                                                            B
                                                                                                                                                                                                A
                                                                                                                                                                    D

                                                                                                            Funds under management
                                                                                                            2009 £3.6bn




                                                                                                                                                                                                         Grosvenor Fund Management
07:34 hours sukiyabashi crossing, Ginza, chiyoda-ku, Tokyo, Japan
Our new leadership team for Grosvenor Fund Management includes Morgan Laughlin, based in Tokyo, appointed
to the new role of Director, Asia Pacific.
Grosvenor Annual Report 2010      Grosvenor Fund management                                                          64      Grosvenor Annual Report 2010                                        Grosvenor Fund management                                                         65
www.grosvenor.com                                                                                                            www.grosvenor.com



Funds under management
                                  Encouragingly, the environment                 Strategy
by sector £m                      continues to improve following the             Investor appetite for property as a long–   Parkside Plaza at Changfeng
                                  global financial crisis. Prime property         term asset class is proven and — given      City:                      Shanghai
                                  has recovered and is arguably fully            patient, skilled management by specialist
                                                                                                                             Country:                   China
                                  priced in some markets, whereas poor           property professionals with experience
                                  grade property remains vulnerable              in the relevant geographic and sectoral     Sector:                    Retail
                                  due to weaker tenant demand.                   markets — property offers investors         Area:                      126,000m2
                                                                                 attractive risk–adjusted returns.           Ownership:                 Grosvenor Vega —
                                  The market in 2010                             Our client base — mostly institutional                                 China Retail Fund
                                  2010 saw improvement in markets                investors, who are professional,
                                                                                                                             The Fund has exchanged contracts, for
                                  although, as with the global economy,          experienced and thoughtful — reflects        US$154m, a 60% interest in this seven–storey
                                  the recovery was patchy.                       our long–term outlook.                      shopping mall under construction in the
                                  Investor confidence returned gradually,         Investor expectations for real              Changfeng district, which will have a strong
                                                                                                                             catchment area, with over 1.5m people in a
   O ce                           with the larger pension funds and              estate funds are never static: as fund      5km radius. Tesco, a cinema, fashion chains
   £1,106.7m              29.0%   sovereign wealth funds being the main          managers, we listen carefully and           and restaurants have been signed as anchor
   Retail                         players, particularly in the major real        respond appropriately, keeping abreast      tenants and, at year end, the mall was 57%
   £2,020.0m              52.8%   estate markets. Income security is critical    of market trends. It is clear that          pre–let. The centre is due to open in 2011.
   Residential                    to achieving best investment pricing,          investors currently seek alignment
   £694.5m                18.2%   whereas pricing for assets with weaker         of interest, local market expertise,
                                  income profiles is significantly discounted.     transparency and good corporate
Funds under management                                                           governance from their managers.
                                  Vacancy levels are starting to fall but
by region £m
                                  this has so far only led to rising rents in    In 2010, we tailored our approach,                                   NO. 5              NO. 5
                                  Asia and a few office markets elsewhere.        moving towards smaller, club–style




                                                                                                                                          1
                                                                                                                                      NO.
                                  Bank lending is slowly freeing up with         funds; discussing the potential for




                                                                                                                                                                                 NO. 3
                                  financing available for good quality,           separate accounts with large investors;
                                  well let property; however, margins            seeking to limit use of bank debt; and
                                  and loan–to–value levels demonstrate           adding to our expertise in the Asian                         NO. 2
                                  that it is still a lenders’ market. Overall,   market, where investor interest remains                                       NO. 2
                                  deleveraging of real estate markets            strong for China. We believe in the




                                                                                                                              NO. 1




                                                                                                                                                                                         NO. 3
                                  remains a critical risk area and will          importance of aligning our interests
                                  take many years to resolve fully.              as fund manager with those of our                     NO. 4
                                                                                                                                                                 NO. 4
                                                                                 investors.
                                  These trends are consistent with past
   UK                             economic cycles, which bodes well for          We will continue to grow our team
   £1,820.0m              47.6%   the continued improvement in real              of professionals organically, but will                                                                                                      Vantage at Kitty Hawk
                                  estate markets and, therefore, the             consider corporate or team acquisitions,
   USA                                                                                                                                                                                                                       City:             San Antonio
   £738.5m                19.4%   opportunity to create value for our            given the opportunities that can arise
                                                                                                                                                                                                                             Country:          USA
                                  investors.                                     at times of change and consolidation
   Continental Europe                                                                                                                                                                                                        Sector:           Residential
   £735.0m                19.2%                                                  in the fund management industry.
                                  Key performance indicators                                                                                                                                                                 Area:             23,000m2
   Asia                           The strength of our investor relationships     Property highlights
   £527.7m                13.8%   is fundamental to our business.                Three of our funds started the year
                                                                                                                                                                                                                             Ownership:        Separate account client

                                  We remained close to our 70 investors          with approximately £712m of committed                                                                                                       We advised our investor partner to
Equity invested £m                throughout the year and focused on             capital available for investment over                                                                                                       provide a mezzanine loan to capitalise
                                                                                                                                                                                                                             the development of a 288–unit multi–family
                                  delivering attractive risk–adjusted            2010 and 2011 and we have exchanged                                                                                                         housing community in Texas, the third in
                                  returns and meeting changing needs.            or completed on 32% of this, through                                                                                                        a series of successful investments with the
                                                                                 a total of 13 transactions.                                                                                                                 same developer, American Opportunity
                                  With our investors, we completed 12
                                                                                                                                                                                                                             for Housing.
                                  debt refinancings or repayments with            The Grosvenor Vega–China Retail
                                  13 banks, amounting to £643m of                Fund exchanged contracts on its first
                                  bank loans to our funds, and agreed            acquisition — Parkside Plaza at
                                  in principle the significant refinancing         Changfeng (see opposite and page 52).
                                  of Grosvenor Liverpool Fund (see pages         In the US, Grosvenor Residential
                                  66 and 67).                                    Investment Partners was particularly
                                                                                 active: it completed seven transactions
                                  As a result of recovering values,                                                                                                                                                                       MISTY R
                                                                                                                                                                                                                                                 IDGE
                                                                                 in the period; finished the year 64%                                                                                                                                    DR
   Grosvenor                      investments in our UK funds performed                                                                                                                                                                                                             IDG
                                                                                                                                                                                                                                                                                       E

   £352.0m                18.8%   well against their benchmarks. For our
                                                                                 invested, with a further three
                                                                                                                                                                                                                             MI                                               PR
                                                                                                                                                                                                                                                                                UC
                                                                                                                                                                                                                                                                                  ER

                                                                                 transactions in the pipeline; and we                                                                                                          LL
                                                                                                                                                                                                                                 ER
                                                                                                                                                                                                                                                                             S
   Pension funds                  funds elsewhere, where relative indices                                                                                                                                                           RD

   £920.0m                49.2%                                                  were also active on behalf of one of our
                                  are less widely available, performance
                                                                                 separate account clients (see Vantage
                                  has been in–line with expectations.




                                                                                                                                                                                                                              DUNSTABLE
   Other                                                                         at Kitty Hawk, in Texas, opposite).
   £598.1m                32.0%   Funds under management increased               Grosvenor French Retail Investments
                                                                                                                                                                                                                                                                           BENTB
                                                                                                                                                                                                                                                                                RIDGE
                                                                                                                                                                                                                                                                                      DR




                                                                                                                                                                                                                                                                                           Grosvenor Fund Management
                                                                                                                                                                                                                                                                      RD
                                  to £3.8bn (2009: £3.6bn) as a result of        acquired a €27m French high street




                                                                                                                                                                                                                                                                     WK
                                                                                                                                                                                                                                                                   HA
                                                                                                                                                                                                                                                                TY
                                  prime real estate prices bouncing back         retail portfolio (see page 66) and




                                                                                                                                                                                                                                                             KIT
                                  in many of our markets and our selective       completed a further €110m of
                                  property acquisitions timed to take            acquisitions.
                                  advantage of the resulting
                                  opportunities.
Grosvenor Annual Report 2010                                                                               Grosvenor Fund management                                                                                             66         Grosvenor Annual Report 2010   Grosvenor Fund management                                                         67
www.grosvenor.com                                                                                                                                                                                                                           www.grosvenor.com


                                                                                                                                                                                                                                                                           The Grosvenor Liverpool Fund                who left us as planned on 17 March 2011,
French high street                                                                                                                                                                                                                                                         (see opposite) agreed in principle a        following the announcement last spring
retail portfolio                                                                                                                                                                                                                                                           £385m refinancing with four banks in         (see Chief Executive’s Review, page 14).
                                                                                                                                                                                                                                                                           December 2010. The new five–year loan        Jeffrey has been a consultant to the
City:                                      Strasbourg and
                                                                                                                                                                                                                                                                           was finalised well ahead of the existing     Board for two years and was briefly our
                                           Aix–en–Provence
                                                                                                                                                                                                                                                                           loan maturing in January 2012 and           first external Non–Executive Chairman.
Country:                                   France                                                                                                                                                                                                                          replaces the original funding put in        He brings with him 40 years’ experience
Sector:                                    Retail                                                                                                                                                                                                                          place six years ago to cover both the       in the investment management industry.
Area:                                      2,200m2                                                                                                                                                                                                                         development phase and the initial
                                                                                                                                                                                                                                                                                                                       At the same time, James Raynor has
Ownership:                                 Grosvenor French                                                                                                                                                                                                                period of trading. The Fund is strongly
                                                                                                                                                                                                                                                                                                                       been promoted to the new role of
                                           Retail Investments                                                                                                                                                                                                              outperforming its benchmarks and
                                                                                                                                                                                                                                                                                                                       Chief Investment Officer, retaining his
                                                                                                                                                                                                                                                                           raised an additional £80m equity from
This is a portfolio of six town–centre retail                                                                                                                                                                                                                                                                          previous responsibility for Continental
                                                                                                                                                                                                                                                                           existing investors.
assets in Strasbourg and Aix–en–Provence.                                                                                                                                                                                                                                                                              Europe, and Robert Davis has been
The buildings are located in the prime                                                                                                                                                                                                                                     Monitoring of loan–to–value ratios and      promoted to Chief Operating Officer,
retail streets and are let to strong tenants,                                                                                                                                                                                                                              other covenants continues as a matter       retaining his previous responsibility
providing stable and secure income.                                                                                                                                                                                                                                        of routine across our portfolio and         for the finance function.
                                                                                                                                                                                                                                                                           we will continue to take a conservative
                                                                                                                                                                                                                                                                                                                       Morgan Laughlin joined the Board on
                                                                                                                                                                                                                                                                           approach to leverage overall.
                                                                                                                                                                                                                                                                                                                       1 January 2011 in the new role of Director,
                                                                                                                                                                                                                                                                           There has been steady growth of             Asia Pacific. This will allow us to expand
                                                                                                                                                                                                                                                                           interest in sustainability from investors   further our operations in the region,
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                                                                                                                                                                                                                                                                           and tenants. We respond accordingly         where we currently manage four funds on
                                                                                                                                                                                                                                                                           where we believe it adds value to fund      behalf of 24 investors and are shortly to
                                                                                                                                                                                                                                                                           assets, the environment and our             market a fifth. Morgan’s arrival coincided
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                                                                                                                                                                                                                                                                           investors, and we are pleased with the      with a restructuring of Grosvenor’s
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                                                                                                                                                                                                                                                                           recognition given to these efforts.         Tokyo team, to increase the number
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                                                                                             L’OPERA                                                                                                                                                                       Details are given in our Environment        of ‘front office’ personnel dedicated to
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         MIRABE
   COURS                                                                                                                                                                                                                                                                   Review 2010 (see www.grosvenor.com).        sourcing deals, managing assets and
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                                                                                                                                                                                                                                                                                                                       servicing investors.
           ZARINE
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                                                                                                                                                                                                                                                                           Our energetic focus on asset management     The outlook
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                                                                                                                                                                                                                                                                           of the portfolio, to optimise income,       We continue to look to the long–term,
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                                                                                 ERAN                                                                                                                                                                                      ensured that occupancy rates remained       where the qualities of real estate as an
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                                                                                                                                                                                                                                                                           strong. We achieved good levels in          investment asset class are proven, and
                                                                                                                                                                                                                                                                           our two residential funds in Japan —        the organisations who choose to invest
                                                                                                                                       Liverpool ONE                                                                                                                       Grosvenor Capital Advisors Partnership      with us share this overall perspective.
                                                                                                                                       City:                            Liverpool                                                                                          and Grosvenor Diamond Capital —
                                                                                                                                                                                                                                                                                                                       There is still much uncertainty but
                                                                                                                                       Country:                         England                                                                                            which averaged 92% over the year; in
                                                                                                                                                                                                                                                                                                                       the global economic recovery seems
                                                                                                                                       Sector:                          Mixed–use                                                                                          Continental Europe, where occupancy
                                                                                                                                                                                                                                                                                                                       reasonably well entrenched.
                                                                                                                                                                                                                                                                           in our retail portfolio remained stable
                                                                                                                                       Area:                            149,000m2                                                                                                                                      Deleveraging of real estate markets
                                                                                                                                                                                                                                                                           at 97%; and in the UK, where occupancy
                                                                                                                                       Ownership:                       Grosvenor Liverpool Fund                                                                                                                       is progressing slowly but it is still a
                                                                                                                                                                                                                                                                           levels in our shopping centres rose from
                                                                                                                                                                                                                                                                                                                       lenders’ market. New regulations such
                                                                                                                                       Liverpool ONE continues to perform strongly.                                                                                        93% to 97% despite difficult economic
                                                                                                                                                                                                                                                                                                                       as the Alternative Investment Fund
                                                                                                                                       It is currently 98% let, 51% of tenants                                                                                             circumstances.
                                                                                                                                                                                                                                                                                                                       Manager Directive, Basel III and
                                                                                                                                       are new to Liverpool and 20 new retailers
                                                                                                                                       opened in 2010, including Hugo Boss,
                                                                                                                                                                                                                                                                           In discussion with their respective         Solvency II, are creating further
                                                                                                                                       Desigual, Habitat, Hollister, Jamie’s Italian                                                                                       investors, we have extended the term        uncertainty and will impact the real
                                                                                                                                       and Kuoni. In 2010, retail turnover was up                                                                                          of the Grosvenor Capital Advisors           estate fund industry in 2011, though
                                                                                                                                       16.9% compared to 2009, and over 24.6m                                                                                              Partnership (Japan) and we are winding      at this stage it is not possible to say
                                                                                                                                       people visited Liverpool ONE.                                                                                                       down the ISPT Grosvenor International       precisely how (see also Finance
                                                                                                                                                                                                                                                                           Property Trust.                             Director’s report, page 16).
                                                                                                                                                                                                                                                                           Data from Preqin (an independent            The real estate market is moving
                                                                                                                                                                                                                                                                           research firm) concludes that new            through the cycle as one would expect.
                                                                                                                                                                                                                                                                           real estate funds are currently taking      As it does so, we are confident that our
                                                                                                                                                                                     ST                                                                                    approximately 18 months to reach a first     local, specialist property teams will be
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                                                                                                                                                                                  LE
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                                                                                                                                                                                                                                                                           closing, highlighting the tough capital–    able to create value for our investors
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                                                                                                                                                                                                                                                                           raising environment for funds. However,     by enhancing income, undertaking
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                                                                                                                                                            TE                                                                                                             we continue to see opportunities in a       selective transactions and creating
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                                                                                                                                                                                                                                                                           number of our markets, including            appropriate new investment vehicles.
                                                                                                                                                             SS
                                                                                                                                                                                                                                                                           London offices, Continental European
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                                                                                                                                                           ME                             ST                     T
                                                                                                                                                         JA                                                   RS                                                                                                       For professional real estate managers
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                                                                                                                                                                                     PARADISE




                                                                                                                                               PORT OF
                                                                                                                                               LIVERPOOL                                                    VE                                                             retail, US multi–family and Japan, and
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                                                                                                                                               BUILDING                                                 HA             BO                                                                                              and investors with patience and
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                                                                                                                                                                                                                                                                           we are refining our strategies to meet
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                                                                                                                                                                                                                                                                                                                                                                     Grosvenor Fund Management
                                                                                                                                                                                                                                                                                                                       a long–term outlook, the future looks
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                                                                                                                                                         CANNING                                            PA
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                                                                                                                                                         DOCK                    ER
                                                                                                                                                                                    ST                            ST                                                       investor demand.
                                                                                                                                                                              LIV                          DUK
                                                                                                                                                                                                                                                                                                                       increasingly attractive.
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                                                                                                                                                           DOCK                                                                                                            Operational highlights
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                                                                                                                                                      ALBERT
                                                                                                                                                                                                                                                                           Jeffrey Weingarten has become Chief
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                                                                                                                                                             GOW                                                                                                           Executive, succeeding Stuart Beevor
Grosvenor Annual Report 2010   Grosvenor Fund management                                                                        68       Grosvenor Annual Report 2010                            Grosvenor Fund management                                                                                   69
www.grosvenor.com                                                                                                                        www.grosvenor.com



GROsvEnOR                      Non–Executive Directors                               5 Robert Davis (Chief Operating Officer)
                                                                                     joined Grosvenor in 2006 from General Motors,       GROsvEnOR
FunD                           1 Mark Preston MRICS (Group Chief Executive)
                               joined Grosvenor in the UK 1989. Seconded to
                                                                                     where he undertook a number of roles within
                                                                                     the Group’s finance function and was most
                                                                                                                                         FunD
mAnAGEmEnT                     Hong Kong in 1995, he returned to lead our
                               fund management operations in 1997, spent
                                                                                     recently Chief Operating Officer, European           mAnAGEmEnT
BOARD OF                                                                                                                                 pORTFOlIO
                                                                                     Operations, for GMAC Commercial Finance
                               four years in San Francisco from 2002, became         Plc. He was promoted to his present role
                               Chief Executive of Grosvenor Britain & Ireland
DIREcTORs                      in 2006 and Group Chief Executive in 2008.
                                                                                     at Grosvenor in March 2011, retaining his
                                                                                     previous responsibilities of Finance Director.
                               He is on the Board of the Association of Foreign
As at 17 March 2011            Investors in Real Estate and a member of the          6 Douglas Callantine (Director, USA) joined
                               North West Business Leaders’ Team. He is a            Grosvenor in 2006 following Grosvenor’s
                               Non–Executive Director of Sonae Sierra SGPS.          acquisition of Legg Mason Real Estate Services,
                                                                                     where he had been President since 1987.
                               2 Nicholas Scarles FCA CPA ATTORNEY AT LAW                                                                Funds under management
                               (Group Finance Director) joined Grosvenor             7 Dominic Field (Director, Business
                               in 2004. He was previously at Centrica,               Development) joined Grosvenor in 2010
                                                                                                                                                                                                                                                      Gross asset value
                               Price Waterhouse, and Coopers and Lybrand.            from Credit Suisse where he was Director of                                                                                                 Number              Office                Retail     Residential             Total
                               He is a Governor of the Haberdashers’ Elstree                                                                                                                                                     of funds              £m                   £m              £m                 £m
                                                                                     the Real Estate Private Fund Group. Previously,
                               Schools, Member of the Court of Assistants            he was National Director of European Client         UK                                                                                           5             397.7             1,383.9          38.4             1,820.0
                               of the Haberdashers Livery Company and a              Services at LaSalle Investment Management.          USA                                                                                         10*            322.6               104.6          311.3               738.5
                               Non–Executive Director of Sonae Sierra SGPS.                                                              Continental Europe                                                                           4*            203.9                531.1              —              735.0
                                                                                     8 Mervyn Howard (Director, UK) joined               Asia                                                                                         4              182.5                0.4        344.8                 527.7
                               Executive Directors                                   Grosvenor in 2001 following roles as Managing       International                                                                                1 ––––––––––––––––––––––––––––––included above––––––––––––––––––––––––––––––
                                                                                     Director of GE Capital’s real estate business in
                               3 Jeffrey Weingarten (Chief Executive) began          the UK and Scandinavia and Head of Business                                                                                                     24          1,106.7            2,020.0             694.5            3,821.2
                               his career as a securities analyst at Scheinman       Development for TrizecHahn Europe.                  Total                                                                                                    29.0%               52.8%            18.2%
                               Hochstein & Trotta in 1970, before moving to
                               Wertheim & Co. In 1977, he joined the research        9 Morgan Laughlin (Director, Asia Pacific)          *Includes separate account clients.
                               division at Goldman Sachs & Co in New York,           joined Grosvenor in January 2011. He was
                               becoming Director of Research in London in            previously Managing Director, Head of               UK
                               1987 and general partner of Goldman Sachs             Real Estate Finance Asia Pacific, at RBS. Prior
                               & Co in 1990. From 1991–1995 Jeffrey was              to joining RBS in 2006, Morgan headed the           Name:                                    GROSVENOR SHOPPING CENTRE FUND                                   Risk profile:                                            Core
                               the Chief Investment Officer and Managing              Deutsche Bank Real Estate/RREEF businesses          Launch date:                             1998                                                             Gross asset value:                                    £338m*
                               Director of Goldman Sachs Asset Management            in Non–Japan Asia. Morgan has over 20 years         Sector:                                  Retail                                                           Number of assets:                                          3
                               International, before returning to International      of experience in the Asian financial markets.                                                                                                                  Number of investors:                                      20
                               Equity Research as Global Strategist. From                                                                Representative assets:
                               1998–2008, Jeffrey was General Partner                                                                    Eastgate Centre                          Covered two–level shopping centre with 65 retail units           Inverness, Scotland                               38,100m2
                               and Chief Investment Officer of Buttonwood                                                                 Freshney Place                           Covered shopping centre with 100 retail units                    Grimsby, Lincolnshire                             46,500m2
                               Capital Partners.
                                                                                                                                        *Includes interest in Grosvenor Festival Place Fund.
                               4 James Raynor (Chief Investment Officer)
                               joined Grosvenor in 2004 from The Royal
                               Bank of Scotland in Paris, where he was Senior                                                            Name:                                    GROSVENOR LONDON OFFICE FUND                                     Risk profile:                                            Core
                               Director of European Real Estate. He was                                                                  Launch date:                             1999                                                             Gross asset value:                                    £398m
                               promoted to his present role at Grosvenor in                                                              Sector:                                  Office                                                            Number of assets:                                          4
                               March 2011, retaining his previous responsibilities                                                                                                                                                                 Number of investors:                                       5
                               of director for Continental Europe.                                                                       Representative assets:
                                                                                                                                         Almack House                             Eight–floor open–plan office building                              West End, London                                    9,300m2
                                                                                                                                         40 Grosvenor Place                       Seven–floor open–plan office building                              West End, London                                   21,300m2


                                                                                                                                         Name:                                    GROSVENOR FESTIVAL PLACE FUND                                    Risk profile:                                             Core
                                                                                                                                         Launch date:                             1999                                                             Number of assets:                                           1
                                                                                                                                         Sector:                                  Retail                                                           Number of investors:                                        3
                               1                                   2                                  3
                                                                                                                                         Sole asset:
                                                                                                                                         Festival Place, Basingstoke              Covered two–level shopping centre with 195 retail units          Basingstoke, Hampshire                            96,700m2


                                                                                                                                         Name:                                    GROSVENOR RESIDENTIAL INVESTMENT FUND                            Risk profile:                                            Core
                                                                                                                                         Launch date:                             2005                                                             Gross asset value:                                     £38m
                                                                                                                                         Sector:                                  Residential                                                      Number of assets:                                         10
                               4                                   5                                  6                                                                                                                                            Number of investors:                                       3
                                                                                                                                         Representative assets:
                                                                                                                                         The Levels                               10 one–bedroom; 18 two–bedroom flats                              Cambridge, Cambridgeshire                           2,100m2
                                                                                                                                         17–19 Nevern Place                       18–unit residential building                                     Earls Court, London                                 1,000m2




                               7                                   8                                  9




                                                                                                                                                                                                                                                                                                                     Grosvenor Fund Management
Grosvenor Annual Report 2010                    Grosvenor Fund management                                                           70      Grosvenor Annual Report 2010                           Grosvenor Fund management                                                71
www.grosvenor.com                                                                                                                           www.grosvenor.com



GROsvEnOR
FunD
mAnAGEmEnT
pORTFOlIO
continued




UK (continued)                                                                                                                              Continental Europe (continued)

Name:                          GROSVENOR LIVERPOOL FUND                                     Risk profile:                           Core     Name:                                   SEPARATE ACCOUNT CLIENT                       Risk profile:                         Various
Launch date:                   2004 (2004–2008, Development Phase,                          Number of assets:                         1     Launch date:                            2009                                          Gross asset value:              €125m (£107m)
                               2009 onwards Investment Phase)                               Number of investors:                      6     Sector:                                 Diversified                                    Number of assets:                          2
Sector:                        Mixed–use                                                                                                                                                                                          Number of investors:                        1
Sole asset:                                                                                                                                 Representative assets:
Liverpool ONE                  Retail and leisure with supporting mixed–uses                Liverpool, Merseyside            149,000m2      Paris Antiques Market                   Two galleries with 450 small retail units     Paris, France                        8,300m2
                                                                                                                                            Omega II                                Office development                             Madrid, Spain                       32,700m2
USA
                                                                                                                                            Asia
Name:                          SHMAEL US REAL ESTATE FUND                                   Risk profile:                       Core plus
Launch date:                   2005                                                         Gross asset value:            US$97m (£62m)     Name:                                   GROSVENOR DIAMOND CAPITAL —                   Risk profile:                             Core
Sector:                        Office                                                        Number of assets:                          6                                            STABLE RESIDENTIAL FUND                       Gross asset value:            JP¥25bn (£198m)
                                                                                            Number of investors:                      15    Launch date:                            2005                                          Number of assets:                          20
Representative assets:                                                                                                                      Sector:                                 Residential                                   Number of investors:                        6
Brookhollow Park               Four–storey office building                                   San Antonio, Texas                 9,600m2      Representative assets:
1450 Infinite Drive             Office/R&D building                                           Louisville, Colorado              14,400m2      Chester Court, Nihonbashi               104–unit residential building                 Tokyo, Japan                         4,900m2
                                                                                                                                            Vert Varie Kitasando                    144–unit residential building                 Tokyo, Japan                         5,000m2
Name:                          GROSVENOR RESIDENTIAL INVESTMENT PARTNERS                    Risk profile:                           Debt
Launch date:                   2007                                                         Gross asset value:            US$37m (£24m)
                                                                                                                                            Name:                                   GROSVENOR CAPITAL ADVISERS PARTNERSHIP        Risk profile:           Value–add/Opportunistic
Sector:                        Residential                                                  Number of assets:                        11
                                                                                                                                            Launch date:                            2004                                          Gross asset value:             JP¥19bn (£147m)
                                                                                            Number of investors:                      5
Representative assets:                                                                                                                      Sector:                                 Residential                                   Number of assets:                           17
Amberwoods                     Portfolio of 41 single–family home lots                      Vista, California                  9,400m2                                                                                            Number of investors:                         6
Oakwood Model Home Portfolio   Mezzanine loan on portfolio of 41 model homes                Denver, Colorado                  10,400m2      Representative assets:
                                                                                                                                            Chester Court, Kasuga                   68–unit residential building                  Tokyo, Japan                         3,600m2
                                                                                                                                            Chester Court, Ochanomizu               118–unit residential building                 Tokyo, Japan                         3,800m2
Name:                          SEPARATE ACCOUNT CLIENTS                                     Risk profile:                        Various
Launch:                        Various                                                      Gross asset value:          US$940m (£601m)
Sector:                        Diversified                                                   Number of assets:                        68     Name:                                   GROSVENOR OFFICE RETAIL FUND                  Risk profile:                  Core/Value–add
                                                                                            Number of investors:                      8*    Launch date:                            2007                                          Gross asset value:            JP¥23bn (£183m)
Representative assets:                                                                                                                      Sector:                                 Office and retail                              Number of assets:                          12
1500K Street                   11–floor office building                                         Washington, DC                   22,600m2                                                                                           Number of investors:                        8
29 Flatbush Avenue             Pre–development of a 310–unit, high–rise, multi–family project Brooklyn, New York                31,100m2    Representative assets:
                                                                                                                                            Joule A Building                        11–floor office building                        Tokyo, Japan                         5,000m2
*Number of separate accounts                                                                                                                Kichijoji Mays One                      Four–floor retail building                     Tokyo, Japan                         1,400m2
Continental Europe
                                                                                                                                            Name:                                   GROSVENOR VEGA — CHINA RETAIL FUND            Risk profile:                         Value–add
Name:                          GROSVENOR RETAIL EUROPEAN PROPERTIES                         Risk profile:                 Core/Value–add     Launch date:                            2008                                          Gross asset value:                US$0m (£0m)
Launch date:                   2004                                                         Gross asset value:            €270m (£231m)     Sector:                                 Retail                                        Number of assets:    No acquisitions completed
Sector:                        Retail                                                       Number of assets:                        36                                                                                           Number of investors:                         7
                                                                                            Number of investors:                      8     Representative assets:
Representative assets:                                                                                                                      No acquisitions completed
102 Rue de Rivoli              High street retail unit                                      Paris, France                       1,100m2
Oviesse Portfolio              Six retail warehouse units                                   Milan, Italy                        6,700m2
                                                                                                                                            International
Name:                          GROSVENOR FRENCH RETAIL INVESTMENTS                          Risk profile:                           Core
Launch date:                   2006                                                         Gross asset value:            €238m (£204m)     Name:                                   ISPT GROSVENOR INTERNATIONAL PROPERTY TRUST   Risk profile:                   Core/Core plus
Sector:                        Retail                                                       Number of assets:                        45     Launch date:                            2004                                          Gross asset value:           A$165m* (£108m)
                                                                                            Number of investors:                      9     Sector:                                 Diversified                                    Number of assets:                           4*
Representative assets:                                                                                                                                                                                                            Number of investors:                        7
Rue Emile Zola                 Six high street retail units                                 Troyes, France                      3,800m2     Representative assets:
Heron Parc                     23 retail units, one cinema, offices and car park             Villeneuve d’Asiq, France          41,200m2     L’Anec Blau                             Covered shopping centre over three levels     Barcelona, Spain                    27,800m2
                                                                                                                                            The River                               Shopping centre with 41 units                 California, USA                     21,200m2
Name:                          GROSVENOR HExAGONE PARTNERSHIP                               Risk profile:                       Core Plus




                                                                                                                                                                                                                                                                                   Grosvenor Fund Management
Launch date:                   2006                                                         Gross asset value:            €160m (£137m)    *Includes interest in Grosvenor Shopping Centre Fund
Sector:                        Office                                                        Number of assets:                          2
                                                                                            Number of investors:                       2
Representative assets:
Colisée                        Office building                                               Paris, France                      23,100m2
Lonthenes                      Office building                                               Paris, France                       3,700m2
Grosvenor Annual Report 2010                     Accounts   72   Grosvenor Annual Report 2010                         Accounts Corporate governance                                                                    73
www.grosvenor.com                                                www.grosvenor.com



Accounts                                                         coRpoRAte GoveRnAnce



73    Corporate governance                                       THE COMBINED CODE
75    Remuneration report                                        Grosvenor’s business approach is based on openness and high levels of accountability, and the Board’s approach to corporate governance follows best
76    Directors’ report                                          practice recommended by the Financial Reporting Council under the heading of the ‘Combined Code’, even though that code applies only to publicly
80    Statement of Directors’ responsibilities                   quoted companies. As a privately-owned Group with its Shareholders represented on the Board, certain provisions of the Combined Code are not relevant
80    Corporate advisers and bankers                             to Grosvenor. The Board has reviewed each of the provisions of the Combined Code issued by the UK Financial Reporting Council in June 2010 and has
81    Independent auditors’ report to the                        determined which of those provisions are appropriate in the context of Grosvenor’s ownership structure.
      members of Grosvenor Group Limited
82    Consolidated income statement                              BOARD OF DIRECTORS
83    Consolidated statement of comprehensive income
83    Consolidated statement of changes in equity                Structure of the Board
84    Balance sheets                                             The composition of the Board is designed to ensure effective management and control of the Group, taking account of the devolved operating structure
85    Consolidated statement of cash flows                        and ensuring that the Shareholders’ interests are properly represented. It was restructured on 1 January 2011 and now consists of the Group Chief
86    Notes to the financial statements                           Executive and Group Finance Director and six Non-Executive Directors (including the Chairman). The Non-Executive Directors include three who represent
124   Consolidated income statement                              the Shareholders (as Trustees of the Grosvenor Trusts) and three who are independent. The Non-Executive Directors demonstrate a range of experience
      presented in US Dollars                                    and professional background that enables them to make a valuable contribution to the Group and to provide independent judgement and challenge
125   Consolidated balance sheet                                 to the Board.
      presented in US Dollars
                                                                 Throughout 2010, prior to the restructuring on 1 January 2011, the Board also included the Chief Executives of each of the five operating companies,
126   Consolidated income statement
                                                                 who are now members of a nominated committee of the Board, the Group Executive Committee, together with the Group Chief Executive and the Group
      presented in Euros
                                                                 Finance Director.
127   Consolidated balance sheet
      presented in Euros                                         Biographies of the members of the Board are set out on page 21.
128   Five–year summary
                                                                 Board effectiveness
                                                                 The Board is responsible for setting and monitoring Group strategy, reviewing performance, ensuring adequate funding, formulating policy on key issues
                                                                 and reporting to the Shareholders.
                                                                 The roles of Chairman and Chief Executive are clearly defined. The Chairman is primarily responsible for overseeing the working of the Board.
                                                                 The Chief Executive is responsible for the implementation of the strategy and policies set by the Board and the day–to–day management of the Group.
                                                                 To enable the Board to discharge its duties, all Directors receive appropriate and timely information, including briefing papers distributed in advance
                                                                 of Board meetings. The Directors have access to the Company Secretary and may, at the Company’s expense, take independent professional advice and
                                                                 receive additional training as they see fit. All new Directors participate in an induction training programme.
                                                                 The Board undertakes a regular evaluation of its own performance.
                                                                 The Board encourages the appointment of Executive Directors to appropriate external posts as this increases their breadth of knowledge and experience.
                                                                 Earnings from all such appointments are returned to the Group.
                                                                 The Board held five meetings during the year, with the following attendance by Directors:

                                                                                                                                                        January         March           June       September       November

                                                                 Number of Directors attending                                                          11/13          13/13          13/13          14/14           11/14

                                                                 COMMITTEES OF THE BOARD

                                                                 Audit Committee
                                                                 The Audit Committee comprises:
                                                                 — Lesley Knox (Chairman)
                                                                 — Lord Home (resigned 31 December 2010)
                                                                 — Domenico Siniscalco
                                                                 — Michael McLintock (appointed 1 January 2011)
                                                                 On 17 March 2011 Lesley Knox was replaced as Chairman of the Audit Committee by Michael McLintock.
                                                                 The Audit Committee is responsible for reviewing a wide range of financial matters, including the annual financial statements and accompanying reports,
                                                                 Group internal and external audit arrangements, accounting policies, internal control and the actions and procedures involved in the management of
                                                                 risk throughout the Group. The Audit Committee reviews annually the scope of the external auditors’ work and their fees. It also considers the auditors’
                                                                 independence which is ensured through a variety of procedures including regular rotation of audit partners. Any non–audit fees received by the auditors
                                                                 in excess of 50% of the audit fee are pre–approved by the Audit Committee.
                                                                 The Audit Committee meets at least three times a year with the auditors and is attended by invitation by the Group Chief Executive, Group Finance Director
                                                                 and other senior personnel as appropriate. The Audit Committee met three times during the year, with full attendance at one meeting and two out of three
                                                                 members attending the other meetings.
                                                                 The Britain & Ireland, Americas, Australia and Asia Pacific Operating Companies each have their own audit committees, which meet at least twice a year.
                                                                 The key decisions of these audit committees are reported to the Group Audit Committee. The activities of Grosvenor Fund Management and Grosvenor
                                                                 Continental Europe are reported to the Group Audit Committee.
Grosvenor Annual Report 2010                          Accounts Corporate governance                                                                      74   Grosvenor Annual Report 2010                         Accounts Remuneration report                                                                       75
www.grosvenor.com                                                                                                                                             www.grosvenor.com



                                                                                                                                                              RemuneRAtion RepoRt



Nominations Committee                                                                                                                                         REpORT ON EMpLOyMENT AND REMuNERATION MATTERS SpECIFICALLy RELATINg TO ExECuTIvE DIRECTORS AND SENIOR STAFF
The Nominations Committee comprises all of the Non–Executive Directors. The Committee meets when necessary and is attended, by invitation, by                 Consistent with the delegation of management responsibility to Operating Company management teams, the Britain & Ireland, Americas, Australia and Asia
the Group Chief Executive and other senior personnel as appropriate. It is responsible for reviewing the structure of the Board, giving consideration         Pacific regions and the Grosvenor Fund Management business have their own remuneration committees with appropriate responsibility for remuneration
to succession planning and for making recommendations to the Board with regard to any changes. It is also responsible for identifying and nominating,         matters within those Operating Companies. The Group Remuneration Committee takes an independent overview of the various Operating Companies’
for the approval of the Board, candidates to fill Board vacancies as and when they arise.                                                                      remuneration and HR policies and practice, providing Group–wide guidelines and frameworks to emulate plc–style best practice.
Remuneration Committee                                                                                                                                        The Group Remuneration Committee comprises three Non–Executive Directors. It meets at least twice a year. The Group Chief Executive and Group Human
The Group Remuneration Committee comprises:                                                                                                                   Resources Director may be invited to attend, unless their own remuneration is being discussed. The Remuneration Committee met four times during the
                                                                                                                                                              year, with full attendance at three of the four meetings and two out of three directors attending the fourth meeting. The Committee is responsible for
— Robin Broadhurst
                                                                                                                                                              overseeing remuneration and employment policies across the whole Group and also for administering directly the remuneration and contracts of Directors
— Alasdair Morrison                                                                                                                                           and staff in the Holding Company. The Committee has access to external independent professional advisers as necessary and receives advice on market pay
                                                                                                                                                              levels and best practice in incentive scheme design.
— Jeremy Newsum
                                                                                                                                                              The Group’s remuneration policies recognise the importance of attracting, retaining and motivating executives of the appropriate calibre and experience
— Lesley Knox (appointed 1 January 2011)
                                                                                                                                                              to enhance the performance and reputation of the Group. The size, complexity and international perspective, as well as the long–term nature of the
The Remuneration Committee meets at least twice a year and is attended by invitation by the Group Chief Executive and Group Human Resources                   business, are all important factors. The policy is to provide competitive potential levels of compensation, benefits and incentive opportunities within
Director, unless their own remuneration is being discussed. A description of the Remuneration Committee’s responsibilities is included in the Remuneration    appropriate local markets.
Report on page 75.
                                                                                                                                                              The remuneration of Executive Directors and senior staff includes a blend of short–term and long–term rewards and has been designed to provide an
                                                                                                                                                              alignment of interests of both employees and Shareholders. The elements are:
INTERNAL CONTROL
The Board is responsible for the Group’s system of internal control and for reviewing its effectiveness. This is designed to manage, rather than eliminate,   — Basic salary and benefits are competitive within the property industry in the locations in which the Group operates. Salaries are reviewed annually,
the risk of not achieving business objectives and can provide only reasonable and not absolute assurance against material misstatement or loss.                 or on promotion. Taxable benefits are provided at levels similar to those for comparable positions.
The Board considers that there is a continuous process for identifying, evaluating and managing significant risks faced by the Group in the course             — Bonus and incentive schemes operate for Executive Directors and senior staff and are designed to link rewards to both individual and company performance.
of its business, which has been in place throughout the year and up to the date of approval of the Annual Report and Accounts. This process is regularly        Awards relating to company performance are determined by the achievement of total return compared with the relevant weighted average cost of capital,
reviewed by the Audit Committee and the Board and is consistent with the internal control guidance for Directors in the Combined Code.                          revenue profit targets and other business improvement targets. The incentive arrangements are designed to reward outstanding performance and are
                                                                                                                                                                linked to the achievement of performance targets at both team and individual levels. A proportion of incentive awards each year are long term and vest
A key part of the system of internal control is the delegation of management responsibility for the Group’s property investment, development and fund
                                                                                                                                                                over periods of up to five years. The Remuneration Committee has discretion to award individual bonuses in recognition of special performance.
management activities, together with supporting functions, to Operating Company management teams. The Group’s Operating Companies have local
boards, with independent Non–Executive Directors, which oversee the Operating Company’s operations. These boards form an integral part of the overall         — Pensions and life assurance for Executive Directors and senior staff in the UK are provided through membership of the Grosvenor Pension Plan (GPP)
internal control process. The relationship between Operating Company boards and the Group Board is clearly defined and is set out in formally approved           and, if applicable, supplementary pension arrangements. GPP is non–contributory and provides, for those who were members before 2004, a maximum
financial delegation procedures. The membership of each Operating Company board is set out in the relevant Operating Company’s section of the business           pension of up to two–thirds of pensionable salary on retirement. The GPP also provides for dependants’ pensions of two–thirds of the member’s pension
review.                                                                                                                                                         and an insured lump–sum payment of four times basic salary in the event of death in service. For all staff who joined the Group after 1 January 2004,
                                                                                                                                                                GPP provides a defined benefit pension up to an upper earnings limit, and above this limit the Group will contribute between 25% and 30% of salary
Each Operating Company and the Holding Company has management structures in place to enable effective decision making, supported by documented
                                                                                                                                                                into employees’ stakeholder accounts.
procedures and a regular review of financial performance, including comparisons against budget and forecasts. Risk management is a regular agenda
item for all parts of the business with the emphasis on continuous improvement. Each Operating Company board undertakes a regular assessment of its           — Outside the UK, pensions are provided from a number of schemes, including separate defined benefit schemes in Australia, Canada (now closed
exposure to financial, operational and strategic risks and the measures that have been put in place to manage those risks. Significant risks arising from         to new participants) and the USA (frozen). Further details of the Group’s pension schemes are given in Note 11 of the Accounts.
Operating Company assessments are monitored by the Group Board.
                                                                                                                                                              A schedule of Directors’ remuneration, including all amounts required to be disclosed by the Directors’ Remuneration Report Regulations 2002, is
In addition to local boards, each Operating Company, together with the Holding Company, is represented on the Group Finance Board, which meets                approved by the Shareholders and details of Directors’ remuneration in accordance with the Companies Act 2006 are set out in Note 12 of the Accounts.
at least twice each year and provides a forum for debating issues of a financial nature that are relevant to the Group as a whole, including Group financial
                                                                                                                                                              The notice period for the termination of the employment of an Executive Director is six months.
policy and risk management.
                                                                                                                                                              Non–Executive Directors representing the Shareholders, with the exception of the Chairman, receive no fee from the Company. The fees for other
The Group operates a ‘co–sourced’ approach to internal audit, working jointly with PricewaterhouseCoopers. Each Operating Company audit committee
                                                                                                                                                              Non–Executive Directors are reviewed every two years by the Chairman. Non–Executive Directors do not have service contracts and do not participate
approves an internal audit plan, which is executed by PricewaterhouseCoopers, but supplemented by Grosvenor employees on occasion and where
                                                                                                                                                              in bonus arrangements.
appropriate. The Operating Company audit committees review the findings from the internal audit reports together with management plans to address
any weaknesses in internal control. The Group Audit Committee has an oversight role, which involves reviewing the Operating Company and Holding               Transactions between the Group and the Grosvenor Trusts are disclosed in Note 40 of the Accounts. Certain Company Directors are Trustees of
Company internal audit plans, summaries of internal audit activity throughout the Group and significant findings of individual reviews.                         Grosvenor Trusts, Trustees of the grosvenor Pension Plan and are also Directors of other companies with which the Group may from time to time
                                                                                                                                                              enter into transactions on normal commercial terms. In the opinion of the Board, none of these relationships are such as to impair the independence
The Board carried out its annual assessment of internal control for the year 2010 at its meeting in March 2011 by considering reports from management
                                                                                                                                                              of the Directors.
and the Audit Committee and taking account of events since 31 December 2010.
                                                                                                                                                              Robin Broadhurst
RELATIONS WITH SHAREHOLDERS AND LENDERS                                                                                                                       Chairman of the Remuneration Committee
Given the private ownership of the Group, the requirements of the Combined Code to communicate with institutional shareholders are not relevant. All the      17 March 2011
principal Shareholders are represented on the Board and all Shareholders receive a monthly report. The Annual Report and Accounts is widely distributed
and the Group’s policy is to maintain close contact during each financial year with bondholders and other lenders at Group and Operating Company levels.
Grosvenor Annual Report 2010                          Accounts Directors’ report                                                                               76     Grosvenor Annual Report 2010                           Accounts Directors’ report                                                                            77
www.grosvenor.com                                                                                                                                                     www.grosvenor.com



DiRectoRs’ RepoRt



The Directors present their Annual Report and the Group’s audited consolidated financial statements for the year ended 31 December 2010.                               property risks
                                                                                                                                                                      Investment properties
pRINCIpAL ACTIvITIES AND BuSINESS REvIEW                                                                                                                              The principal risk in property investment is the loss of income. The Group ensures that properties are properly maintained and managed, occupancy
The Group’s principal activities are property investment, development and fund management in Britain and Ireland, the Americas, Continental Europe,                   is maximised and exposure to individual tenants is managed. Asset management is undertaken by teams with overall responsibility for the properties
Australia and Asia Pacific.                                                                                                                                            within their portfolios. Day–to–day property management is either outsourced to professional property managers or managed in–house.
The review of the business in accordance with the requirements of Section 417 of the Companies Act 2006 (the ‘Business Review’) can be found in the                   Leasing risk is managed by dedicated in–house leasing teams and the use of professional leasing agents. Exposure to individual tenants or sector
review section on pages 1 to 71, which is incorporated into this report by reference.                                                                                 groups is reduced by maintaining a diversified tenant base and by reviewing the credit–worthiness of new tenants.
The other information that fulfils the requirements of the Business Review is set out below.                                                                           Developments
                                                                                                                                                                      In property development the main risks arise in managing the development cycle, including obtaining appropriate planning consents and controlling
RISkS AND uNCERTAINTIES                                                                                                                                               the construction process. The Group has dedicated teams involved in site assembly and planning, and limits committed expenditure prior to planning
The Group aims to generate returns over the long term at or above its cost of capital. Each Operating Company endeavours to maximise its returns                      consent being obtained. Construction risk is managed by in–house project management teams using external contractors. In many cases construction
in accordance with an agreed stance on risk. The Group seeks to ensure that the risks encountered by the business are identified, quantified, understood                risk is shared with partners.
and managed in an appropriate way.
                                                                                                                                                                      Capital raising
The Group’s operations are managed under a devolved structure. However, since the activities of property investment, development and fund management                  The Group has no plans to seek further equity capital through the issue of new shares. Capital for investment is available from retained earnings.
are common to each region, the nature of business risks encountered in each region is broadly similar. Set out below is a summary and explanation of the              The Group’s preference for working with partners and fund management investors provides access to capital, beyond its own resources, for specific
principal risks faced by the business.                                                                                                                                investment and development opportunities. Working with like–minded investors in property is a core part of the Group’s business.
Market risk                                                                                                                                                           Acquisitions and sales
Property markets are cyclical, so the Group’s businesses will always be subject to variations in the value of the portfolio. Taking a long–term view,                 When acquiring or selling property the principal risk is in assessing the future income flows, in order to determine an appropriate price. The timing
the Group’s focus is less on short–term fluctuations and more on underlying revenue–generating potential.                                                              of property transactions is managed as part of the annual asset allocation review within each Operating Company. Estimated price levels are supported
                                                                                                                                                                      by detailed financial appraisals, which are conducted for all property transactions. Where deals occur within joint ventures or funds, they require the
Exposure to market risk is mitigated through a balanced allocation of capital to different geographic markets, currencies and property sectors, which
                                                                                                                                                                      approval of an investment committee that is independent from the asset management team. Every property transaction is subject to a due diligence
is explained in more detail under asset allocation below.
                                                                                                                                                                      review, including corporate due diligence where properties are acquired within corporate vehicles.
Short–term market risk is more relevant in development activity, where market conditions may affect leasing terms and capitalisation rates. The Group
                                                                                                                                                                      Financial and tax risks
commits to development projects only after taking careful account of the market outlook. Development exposures are frequently reduced by working
                                                                                                                                                                      The principal financial risks faced by the Group are liquidity, credit, interest rate and foreign currency risk. Each of these risks is explained in more detail
in joint ventures.
                                                                                                                                                                      and analysed in Note 31 of the Accounts.
The Group is able to make use of property derivatives as a further mechanism for managing exposure to market risk.
                                                                                                                                                                      Exposure to tax risk arises across a large number of tax jurisdictions. In addition to different tax filing requirements in each territory, there is also
Asset allocation                                                                                                                                                      exposure to the impact of future changes in tax legislation. These risks are managed by an in–house team which works alongside external tax advisers.
The Group’s primary financial objective is to maximise returns at acceptable levels of risk. Fundamental to this is the optimal allocation of equity between
                                                                                                                                                                      Health and safety
each of the Operating Companies and the devolution of property decision–making authority to local boards.
                                                                                                                                                                      The Group is committed to achieving high standards of health and safety throughout the business and aspires to best practice.
The allocation of equity to Operating Companies is a continuous process on an annual cycle. The process includes detailed research of long–term
                                                                                                                                                                      Overall responsibility for health and safety is taken by the Group Finance Director. Each Operating Company board is responsible for health and safety
(5+ years) macro–economic projections, a review of regional economic and Operating Company historic and projected performance, consideration of
                                                                                                                                                                      in its business with the support of the internal Health and Safety Director and external consultants with local expertise to help them achieve compliance.
wider issues such as climate change, and the use of portfolio theory simulations. From this, the Holding Company determines a range of the desired relative
weighting of capital to each Operating Company over the long term. Medium–term (2–5 year) target weightings are set by reference to long–term ranges,                 The Group’s objective is to ensure that employees throughout the Group are well informed and consulted on matters regarding health and safety, which
adjusted for medium–term factors. Actual annual allocations are made consistent with medium–term targets and long–term ranges, but also in response                   is treated as a key part of the wider risk management process.
to short–term (0–2 year) tactical and opportunistic considerations. The Group retains the financial capacity for unplanned opportunities that may arise.
                                                                                                                                                                      Each Operating Company reviews and reports formally its compliance each year and progress is monitored on a regular basis.
Long–term ranges for equity (adjusted for deferred tax) allocated to Operating Companies, agreed in June 2010, together with actual equity allocations
                                                                                                                                                                      The Group continues to review its reporting of performance information and its health and safety information technology system to assist the business.
at 31 December 2010, were as follows:
                                                                                                                                                                      All accidents and cases of ill health are treated seriously. In 2010 Grosvenor had two reportable incidents to statutory authorities in Britain and Ireland,
                                                                                                                                       percentage of group equity     which were investigated and relevant action was taken. Each business made good progress in completing its health and safety action plan.
                                                                                                                                       Long–term     At 31 December   Grosvenor received no enforcement notices from statutory health and safety authorities in 2010.
                                                                                                                                           range               2010
                                                                                                                                               %                 %
                                                                                                                                                                      Each business sets itself annual targets in order to achieve their board objectives. These include verifying that workplace and other risks are being
Operating Company                                                                                                                                                     controlled and improved where necessary.
Britain & Ireland                                                                                                                   40.0—65.0                 52.6
Americas                                                                                                                            12.5—27.5                 16.8
Continental Europe                                                                                                                   5.0—12.5                 16.2
Asia Pacific                                                                                                                          2.5—20.0                  6.8
Australia                                                                                                                            2.5—10.0                  6.6
Fund Management                                                                                                                        0—10.0                  1.0

At the Operating Company level, each board reviews its strategy annually. This review takes account of the geographic allocation in the region as well
as the allocation between sectors and the split between investment and development.
The current distribution of the Group’s total assets under management is shown on page 5.
Grosvenor Annual Report 2010                           Accounts Directors’ report                                                                           78   Grosvenor Annual Report 2010                             Accounts Directors’ report                                                                                   79
www.grosvenor.com                                                                                                                                                www.grosvenor.com




Environment                                                                                                                                                      DIRECTORS’ INTERESTS IN SECuRITIES
This year the Annual Report references an on-line, stand alone Environment Review (see pages 6 to 7), reviewing our environmental management activities.         The interests of the Directors who served during the year in the share and loan capital of Grosvenor Group Limited are shown below.
Reputation and brand                                                                                                                                                                                                                             Non–Voting
The professional reputation of the individuals and businesses within the Group is an important intangible asset, as is the Grosvenor brand. The Group                                                         Ordinary Shares                  Ordinary Shares               ‘A’ Preference Shares             ‘B’ Preference Shares
seeks to manage these assets by investing appropriately in them, and by identifying potential reputational or brand risks and acting swiftly to mitigate                                                          At               At              At               At             At                At              At                At
                                                                                                                                                                                                           1 January      31 December       1 January      31 December      1 January       31 December       1 January       31 December
those risks. All staff are briefed on the definition of the Group’s brand and are advised on how to align communications and behaviour with it, and detailed                                                     2010             2010            2010             2010           2010              2010            2010              2010
brand management guidelines are provided for relevant in–house and consultancy teams.
                                                                                                                                                                 Non–beneficial
people                                                                                                                                                           Lord Home                              1,515,529        1,515,529       12,124,233      12,124,233       1,515,529         1,515,529      59,105,631       28,795,051
The Group takes considerable care in recruiting, retaining and developing Grosvenor people. Graduate qualifying programmes and a range of development            Jeremy H M Newsum                     4,290,433        4,290,433       34,323,463      34,323,463       4,290,433         4,290,433      167,326,887       81,518,227
opportunities exist. Succession planning is overseen by remuneration committees. Compensation is regularly benchmarked against the market and the                Robin S Broadhurst                    4,052,363        4,052,363       32,418,904      32,418,904       4,052,363         4,052,363      158,042,157      76,994,897
Group rewards loyalty, excellence and effort.                                                                                                                    Lesley M S Knox                                —       1,640,580                 —     13,124,639                —        1,640,580                —       31,171,020
Information technology
The Group’s operations are dependent on the effectiveness of IT systems, including an international communications network, property databases,                  The non–beneficial interests above represent the shares owned by the respective Directors in their capacity as Trustees of the Grosvenor Trusts.
accounting and treasury systems. Procedures are in place to protect the security and integrity of data, and the Group has detailed incident management           On 1 January 2011 Lord Home resigned from the Board and so no longer held shares as a Director. There have been no other changes in beneficial
and business continuity plans which are tested on a regular basis. The Business Process Group, which was established in 2006, continues to ensure that           or non–beneficial interests since 31 December 2010.
the Group benefits from the efficient delivery of Group–wide process and system changes.                                                                           Where a Director has a joint interest in securities, the above disclosures include for each Director the number of securities that are jointly held.

kEy pERFORMANCE INDICATORS AND MEASuRES OF RETuRN                                                                                                                Except as disclosed above, none of the Directors of the Company who served during the year had any interests in the securities of the Company
Grosvenor takes a long–term view so is less interested in year–on–year comparisons and is more concerned with the overall trend in performance.                  or any of its subsidiary undertakings.

The Group monitors total return on property assets and growth in revenue profit. Total return is calculated on a proportional basis, including the                CHARITABLE AND pOLITICAL DONATIONS
appropriate share of joint ventures and associates. Revenue profit is shown in Note 4. Total return and revenue profit are defined in the glossary.                 Charitable contributions during the year amounted to £1.7m (2009: £1.8m). £1.4m was donated to the Westminster Foundation (2009: £1.4m),
Achievement against these indicators is set out in the Finance Director’s report on pages 17 to 19. Appropriate key performance indicators are employed          which supports a wide range of charitable causes. No political contributions were made during the year (2009: £nil).
throughout the Group to help achieve ambitious goals and a philosophy of continuous improvement.
                                                                                                                                                                 pOLICy ON pAyMENT OF SuppLIERS
RESuLTS AND DIvIDENDS                                                                                                                                            Payment terms are agreed with suppliers on an individual basis. It is the policy of both the Company and the Group to abide by the agreed terms, provided
The results for the year are set out in the consolidated income statement on page 82. Profit for the year was £316.8m (2009: £208.8m loss). Dividends             that the suppliers also comply with all relevant terms and conditions. In respect of the Group’s activities in the UK, trade creditors at 31 December 2010
paid during the year amounted to £11.6m (2009: £15.4m).                                                                                                          represented eleven days’ purchases (2009: four days). The Company has no trade creditors.

FINANCIAL SERvICES ACTIvITIES                                                                                                                                    EMpLOyEES
Grosvenor Investment Management Limited, a wholly owned subsidiary, is authorised and regulated in the UK by the Financial Services Authority                    The Group gives full and fair consideration to applications by disabled persons for employment. Disabled employees and those who become disabled
for the purposes of undertaking regulated activities.                                                                                                            are afforded the same training, career development and promotion opportunities as other staff. The Directors recognise the importance of good
Grosvenor Australia Nominees Pty Limited, a wholly owned subsidiary, is authorised to provide financial services and products to wholesale clients                communications and relations with the Group’s employees. Each part of the Group maintains employee relationships appropriate to its own particular
under its Australian Financial Services Licence No. 302153 issued by the Australian Securities and Investments Commission.                                       needs and environment.

Grosvenor Investment Management US Inc., a wholly owned subsidiary, is a registered investment adviser in the USA pursuant to the Investment                     pOST BALANCE SHEET EvENT
Advisers Act of 1940, for the purposes of providing real estate related investment advice.                                                                       Subsequent to the year end the Group agreed to issue £125m of debt in the US private placement market, at fixed interest rates and for terms of 20
The Japan Branch of Grosvenor Fund Management Japan Limited, a wholly owned subsidiary, is authorised to provide financial services and products                  and 30 years.
under its Kanto Local Finance Bureau (Kinsyo) License No. 1956 issued by The Financial Services Agency, the Japanese Government.
                                                                                                                                                                 AuDITORS
gOINg CONCERN                                                                                                                                                    Deloitte LLP have been appointed as auditors under the provisions of section 487 of the Companies Act 2006.
The Group’s business activities, together with the factors likely to affect its future development, performance and financial position, are set out in the        Each person who is a Director at the date of approval of this report confirms that:
review section on pages 1 to 71 and the principal risks and uncertainties faced by the Group are described in the Directors’ report. In addition Note 31
to the financial statements includes an explanation of the Group’s policies and processes for managing its financial and capital risks, details of its financial    a) in so far as the Director is aware, there is no relevant audit information of which the auditors are unaware; and
instruments and the exposure to interest rates, credit and liquidity risk.                                                                                       b) the Director has taken all reasonable steps that he/she ought to have taken to make himself/herself aware of any relevant audit information
Each Operating Company and the Group, as part of its regular evaluation of liquidity risk, models the principal risks and uncertainties in its cash flow             and to establish that the Company’s auditors are aware of that information.
projections for the foreseeable future, including an assessment of compliance with banking covenants and the implications of any facilities that are             This information is given in accordance with s.418 of the Companies Act 2006.
due to expire in the next 12 months.
                                                                                                                                                                 Judith Ball                                                            UK Company registration number 3219943
Based on the Operating Company and Group cash flow projections, the Group is satisfied that it has sufficient headroom from its cash balances and                   Company Secretary                                                      Registered Office
committed borrowing facilities to support the funding requirements of those projections.                                                                         17 March 2011                                                          70 Grosvenor Street
Therefore, after making appropriate enquiries, the Directors have a reasonable expectation that the Company and the Group have adequate resources                                                                                       London W1K 3JP
to continue in business for the foreseeable future. Accordingly, the financial statements have been prepared on the going concern basis.

DIRECTORS
Details of the Directors of the Company and their biographies are given on pages 20 and 21. All Directors served throughout the year. As a result
of the change in the composition of the Board which took effect from 1 January 2011, the following directors resigned on 31 December 2010:
Stuart Beevor
Andrew Bibby
Lord Home
Rob Kerr
Nick Loup
Peter Vernon
Grosvenor Annual Report 2010                          Accounts Statement of Directors’ responsibilities                                                 80   Grosvenor Annual Report 2010                          Accounts Independent auditors’ report                                                             81
www.grosvenor.com                                                                                                                                            www.grosvenor.com



stAtement of DiRectoRs’ Responsibilities                                                                                                                     inDepenDent AuDitoR’s RepoRt
                                                                                                                                                             to the members of grosvenor group Limited




The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable laws and regulations.                We have audited the financial statements of Grosvenor Group Limited for the year ended 31 December 2010 which comprise the consolidated income
                                                                                                                                                             statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity, the consolidated and parent company
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors are required to prepare Group
                                                                                                                                                             balance sheets, the consolidated statement of cash flows, and the related Notes 1 to 41. The financial reporting framework that has been applied
financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and Article 4 of the IAS
                                                                                                                                                             in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the
Regulation and have also chosen to prepare the parent company financial statements under IFRSs as adopted by the European Union. Under company
                                                                                                                                                             parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
law the Directors must not approve the accounts unless they are satisfied that they give a true and fair view of the state of affairs of the Company
and of the profit or loss of the Company for that period. In preparing these financial statements, International Accounting Standards requires that            This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work
the Directors:                                                                                                                                               has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditors’ report and for
                                                                                                                                                             no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s
— properly select and apply accounting policies;
                                                                                                                                                             members as a body, for our audit work, for this report, or for the opinions we have formed.
— present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
                                                                                                                                                             RESpECTIvE RESpONSIBILITIES OF DIRECTORS AND AuDITOR
— provide additional disclosures when compliance with the specific requirements in IFRSs are insufficient to enable users to understand the impact
                                                                                                                                                             As explained more fully in the Statement of Directors’ responsibilities, the Directors are responsible for the preparation of the financial statements and
  of particular transactions, other events and conditions on the entity’s financial position and financial performance; and
                                                                                                                                                             for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with
— make an assessment of the Company’s ability to continue as a going concern.                                                                                applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s (APB’s)
                                                                                                                                                             Ethical Standards for Auditors.
The Directors are responsible for keeping proper accounting records that are sufficient to show and explain the Company’s transactions and disclose with
reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies
                                                                                                                                                             SCOpE OF THE AuDIT OF THE FINANCIAL STATEMENTS
Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection
                                                                                                                                                             An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the
of fraud and other irregularities.
                                                                                                                                                             financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website.                 policies are appropriate to the Group’s and the parent company’s circumstances and have been consistently applied and adequately disclosed; the
Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.     reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements.
We confirm to the best of our knowledge:
                                                                                                                                                             OpINION ON FINANCIAL STATEMENTS
1 the financial statements, prepared in accordance with International Financial Reporting Standards as adopted by the EU, give a true and fair view           In our opinion:
  of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and
                                                                                                                                                             — the financial statements give a true and fair view of the state of the Group’s and the parent company’s affairs as at 31 December 2010 and of the
2 the management report, which is incorporated into the Directors’ report, includes a fair review of the development and performance of the business           Group’s profit for the year then ended;
  and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal
                                                                                                                                                             — the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
  risks and uncertainties that they face.
                                                                                                                                                             — the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied
This responsibility statement was approved by the Board of Directors on 17 March 2011 and is signed on its behalf by:
                                                                                                                                                               in accordance with the provisions of the Companies Act 2006; and
Lesley knox
                                                                                                                                                             — the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

                                                                                                                                                             OpINION ON OTHER MATTER pRESCRIBED By THE COMpANIES ACT 2006
                                                                                                                                                             In our opinion the information given in the Directors’ report for the financial year for which the financial statements are prepared is consistent with
coRpoRAte ADviseRs AnD bAnkeRs                                                                                                                               the financial statements.

                                                                                                                                                             MATTERS ON WHICH WE ARE REquIRED TO REpORT By ExCEpTION
                                                                                                                                                             We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
Auditors:                  Deloitte LLP
                                                                                                                                                             — adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches
Tax advisers:              KPMG LLP                                                                                                                            not visited by us; or
principal valuers:         DTZ Debenham Tie Leung, Cushman & Wakefield, Jones Lang LaSalle                                                                    — the parent company financial statements are not in agreement with the accounting records and returns; or
Solicitors:                Boodle Hatfield, Slaughter and May                                                                                                 — certain disclosures of Directors’ remuneration specified by law are not made; or
Lead bankers:              The Royal Bank of Scotland Group plc                                                                                              — we have not received all the information and explanations we require for our audit.
Actuaries:                 Lane Clark & Peacock LLP                                                                                                          Mark goodey (Senior Statutory Auditor)
                                                                                                                                                             for and on behalf of Deloitte LLP
                                                                                                                                                             Chartered Accountants and Statutory Auditor
                                                                                                                                                             London, United Kingdom
                                                                                                                                                             17 March 2011
Grosvenor Annual Report 2010                        Accounts Consolidated income statement                       82       Grosvenor Annual Report 2010                          Accounts Consolidated statement of comprehensive income                                                                83
www.grosvenor.com                                                                                                         www.grosvenor.com



consoliDAteD income stAtement                                                                                             consoliDAteD stAtement of compRehensive
for the year ended 31 December 2010                                                                                       income for the year ended 31 December 2010

                                                                                                      2010       2009                                                                                                                                                                2010              2009
                                                                                             Note      £m          £m                                                                                                                                                                 £m                 £m

Total revenue                                                                                  5    214.7       288.1     profit/(loss) for the year                                                                                                                                 316.8           (208.8)
                                                                                                                          Revaluation of property plant and equipment                                                                                                                 3.6              (1.2)
Gross rental income                                                                            6    114.8       133.2
                                                                                                                          Available for sale financial assets:
Property outgoings                                                                             7    (41.1)      (45.8)
                                                                                                                             Gains/(losses) arising during the period                                                                                                                 1.5              (9.8)
Net rental income                                                                                    73.7         87.4    Fair value adjustments on swaps
Other income                                                                                   8     54.0         35.1       Gains/(losses) arising during the period                                                                                                                 1.8               (1.9)
Administrative expenses                                                                        9    (86.2)      (84.5)    Exchange differences on translation of foreign operations                                                                                                  69.7            (40.8)
Net loss on trading properties                                                                13      (5.7)       (1.4)   Actuarial losses on defined benefit pension schemes                                                                                                          (0.6)            (12.0)
Net losses on other investments                                                               14      (1.5)      (12.8)   Tax relating to other comprehensive income                                                                                                                 (4.1)               2.9
Net gains/(losses) on revaluation and sale of investment property                             15    292.4        (87.6)
                                                                                                                          Other comprehensive income/(expense)                                                                                                                       71.9            (62.8)
Share of gain/(loss) from joint ventures and associates                                       23    103.7      (134.4)
                                                                                                                          Total comprehensive income/(expense) for the period                                                                                                       388.7           (271.6)
gain/(loss) from operations including share of joint ventures and associates                        430.4      (198.2)
Dividend income                                                                               16       0.4         0.4    Attributable to:
Financial income                                                                              16      10.1         9.0      Equity holders of the parent                                                                                                                            384.3           (244.5)
Financial expenses                                                                            16     (47.4)     (44.6)      Non-controlling interests                                                                                                                                 4.4             (27.1)
Fair value adjustments                                                                        16       1.3        (2.4)
                                                                                                                                                                                                                                                                                    388.7           (271.6)
Net financing costs                                                                            16    (35.6)      (37.6)
profit/(loss) before tax                                                                             394.8      (235.8)    The Company’s equity increased during the year as a result of dividends received from subsidiaries for the year of £21.1m (2009: £20.2m) and reduced
Current tax expense                                                                           17       (1.5)     (51.5)   as a result of dividends paid to Shareholders of £11.6m (2009: £15.4m).
Deferred tax (expense)/credit                                                                 17     (76.5)       78.5
profit/(loss) for the year                                                                    38     316.8      (208.8)
Attributable to:
Equity holders of the parent                                                                 38      311.7     (190.6)
Non-controlling interests                                                                    38        5.1       (18.2)
profit/(loss) for the year                                                                    38     316.8      (208.8)



                                                                                                                          consoliDAteD stAtement of chAnGes in equity
                                                                                                                          for the year ended 31 December 2010




                                                                                                                                                                                                    Attributable to equity holders of the parent
                                                                                                                                                                                                                                                                                           Non-
                                                                                                                                                                       Share       Share   Translation          Other       Fair value     Revaluation       Retained                controlling      Total
                                                                                                                                                                      capital   premium       reserve         reserve         reserve         reserve        earnings       Total       interest     equity
                                                                                                                                                                         £m          £m            £m             £m               £m              £m              £m         £m             £m         £m

                                                                                                                          Balance at 1 January 2009                   56.8        173.1       362.5            98.2              (5.5)             101.9     1,863.3    2,650.3         186.2      2,836.5
                                                                                                                          Changes in equity for 2009
                                                                                                                          Loss for the year                             —            —            —               —                 —                   —    (190.6)     (190.6)         (18.2)    (208.8)
                                                                                                                          Other comprehensive expense                   —            —        (33.0)            (1.6)            (9.0)               (1.0)      (9.3)      (53.9)         (8.9)      (62.8)
                                                                                                                          Dividends                                     —            —            —               —                 —                   —      (15.4)      (15.4)         (6.2)      (21.6)
                                                                                                                          Transfer between reserves                  221.7       (144.8)       (13.5)        (108.7)             (0.9)             (93.9)     136.5         (3.6)          3.6           —
                                                                                                                          Balance at 31 December 2009                278.5        28.3        316.0            (12.1)           (15.4)               7.0     1,784.5    2,386.8         156.5      2,543.3
                                                                                                                          Changes in equity for 2010
                                                                                                                          Profit for the year                              —           —           —               —                 —                 —        311.7      311.7            5.1      316.8
                                                                                                                          Other comprehensive income/(expense)            —           —         69.9             2.3              1.4                2.7        (3.7)     72.6            (0.7)       71.9
                                                                                                                          Dividends                                       —           —           —               —                 —                 —        (11.6)     (11.6)          (0.9)      (12.5)
                                                                                                                          Transfer between reserves                       —           —          0.7             0.1                —                 —          2.6        3.4           (3.4)         —
                                                                                                                          Non-controlling shares issued
                                                                                                                             by subsidiaries                              —           —            —               —                —                  —          —           —             2.4        2.4
                                                                                                                          Non-controlling shares acquired
                                                                                                                             by subsidiaries                             —            —            —             —                  —                  —          —           —         (32.4)       (32.4)
                                                                                                                          Redemption of Preference Shares            (113.6)          —            —          113.6                 —                  —      (113.6)    (113.6)            —       (113.6)
                                                                                                                          Balance at 31 December 2010                164.9        28.3       386.6            103.9            (14.0)                9.7     1,969.9    2,649.3         126.6      2,775.9
Grosvenor Annual Report 2010                      Accounts Balance sheets                                                            84     Grosvenor Annual Report 2010                          Accounts Consolidated statement of cash flows                                      85
www.grosvenor.com                                                                                                                           www.grosvenor.com



bAlAnce sheets                                                                                                                              consoliDAteD stAtement of cAsh flows
as at 31 December 2010                                                                                                                      for the year ended 31 December 2010




                                                                                              Group                     Company                                                                                                                                           2010       2009
                                                                                                                                                                                                                                                                Note       £m          £m
                                                                                       2010              2009        2010            2009
                                                                            Note        £m                 £m         £m               £m
                                                                                                                                            Operating activities
ASSETS                                                                                                                                      Operating profit before changes in working capital and provisions                                                   39(a)     36.3       24.2
Non–current assets                                                                                                                          (Increase)/decrease in trade and other receivables                                                                          (41.1)      39.3
Investment property                                                         19     2,525.9            2,279.1           —               —   Decrease in trading properties                                                                                                4.3       13.9
Other property, plant and equipment                                         21        35.6               33.1           —               —   Decrease in trade and other payables                                                                                         (0.8)     (36.7)
Investments in subsidiaries                                                 22           —                  —     1,358.4         1,358.4   Decrease in employee benefits                                                                                                  (1.5)     (4.2)
Investments in joint ventures and associates                                23     1,063.3             859.6            —               —   Decrease in provisions                                                                                                        (7.1)    (46.9)
Other financial assets                                                       24        42.6               38.7           —               —   Cash flow from operations                                                                                                    (9.9)       (10.4)
Intangible assets                                                           25         4.9                5.0           —               —   Interest paid                                                                                                              (49.1)       (47.7)
Deferred tax assets                                                         26       103.9               95.3           —               —   Income taxes paid                                                                                                          (63.6)         (7.0)
Total non–current assets                                                           3,776.2            3,310.8     1,358.4         1,358.4   Interest received                                                                                                           10.2           8.6
Current assets                                                                                                                              Net cash flows from operating activities                                                                                    (112.4)     (56.5)
Trading properties                                                          27       138.7             142.3          —                —    Investing activities
Trade and other receivables                                                 28       156.9             165.5       200.3           304.4    Proceeds from sale of investment property                                                                                  208.0       534.6
Other financial assets                                                       24         0.5               5.2          —                —    Acquisition of investment property                                                                                          (93.4)        (4.5)
Income tax receivable                                                                 36.1               5.4          —                —    Development of investment property                                                                                           (13.2)     (25.4)
Cash and cash equivalents                                                   29       269.4             505.2          —                —    Acquisition of other property, plant and equipment                                                                            (0.4)       (0.6)
Total current assets                                                                 601.6             823.6       200.3           304.4    Proceeds from sale of other financial assets                                                                                     6.1        4.2
                                                                                                                                            Acquisition of other financial assets                                                                                           (1.5)       (1.2)
TOTAL ASSETS                                                                       4,377.8            4,134.4     1,558.7         1,662.8
                                                                                                                                            Net cash flow from joint ventures and associates                                                                              80.0         17.3
LIABILITIES                                                                                                                                 Proceeds from sale of joint ventures and associates                                                                           18.6         4.5
Non–current liabilities                                                                                                                     Acquisition of joint ventures and associates                                                                               (125.1)       (17.4)
Interest–bearing loans and borrowings                                       30      (613.8)            (723.8)         —               —    Dividends received                                                                                                             0.4         0.4
Trade and other payables                                                    32      (165.0)            (148.6)         —               —    Net cash flows from investing activities                                                                                      79.5       511.9
Employee benefits                                                             11       (37.1)             (37.2)        —               —
Deferred tax liabilities                                                    26      (522.1)            (431.5)         —               —    Financing activities
                                                                                                                                            Proceeds from additional borrowings                                                                                           71.9     100.0
Total non–current liabilities                                                      (1,338.0)          (1,341.1)        —               —    Repayment of borrowings                                                                                                    (129.9)     (116.0)
Current liabilities                                                                                                                         Non-controlling shares issued by subsidiaries                                                                                  2.4          —
Overdrafts                                                                  29         (0.1)               —           —               —    Non-controlling shares acquired by subsidiaries                                                                             (32.4)          —
Interest–bearing loans and borrowings                                       30      (124.8)             (51.6)         —               —    Redemption of shares                                                                                                       (113.6)          —
Trade and other payables                                                    32       (123.1)           (145.1)         —               —    Dividends paid                                                                                                               (12.5)     (21.6)
Income tax payable                                                                    (12.4)            (42.7)         —               —    Net cash flows from financing activities                                                                                     (214.1)      (37.6)
Provisions                                                                   33        (3.5)            (10.6)         —               —
                                                                                                                                            Net (decrease)/increase in cash and cash equivalents                                                                       (247.0)     417.8
Total current liabilities                                                           (263.9)            (250.0)         —               —    Cash and cash equivalents at 1 January                                                                                      505.2      90.2
TOTAL LIABILITIES                                                                  (1,601.9)          (1,591.1)        —               —    Effect of exchange rate fluctuation on cash held                                                                               11.1      (2.8)
NET ASSETS                                                                          2,775.9           2,543.3     1,558.7         1,662.8   Cash and cash equivalents at 31 December                                                                             29    269.3       505.2
Equity
                                                                                                                                            The Company had no cash or cash equivalents during the current and prior year and accordingly no cash flow is presented.
Share capital                                                               37       164.9              278.5       164.9           278.5
Share premium                                                               38        28.3               28.3        28.3            28.3
Reserves                                                                    38       486.2              295.5     1,164.6         1,051.0
Retained earnings                                                           38     1,969.9            1,784.5       200.9           305.0
Shareholders’ funds                                                         38     2,649.3            2,386.8     1,558.7         1,662.8
Non-controlling interests                                                   38       126.6              156.5          —               —
TOTAL EquITy                                                                38      2,775.9           2,543.3     1,558.7         1,662.8

Approved by the Board on 17 March 2011 and signed on behalf of the Board
Lesley knox (Chairman)
Nicholas Scarles (Group Finance Director)
Company registration number: 3219943
Grosvenor Annual Report 2010                           Accounts Notes to the financial statements                                                           86     Grosvenor Annual Report 2010                            Accounts Notes to the financial statements                                                                 87
www.grosvenor.com                                                                                                                                                  www.grosvenor.com



notes to the finAnciAl stAtements



1 Accounting policies                                                                                                                                              1 Accounting policies continued
                                                                                                                                                                   Leases where substantially all the risks and rewards of ownership are transferred to the tenant are classified as finance leases. A finance lease asset is
(A) BASIS OF pREpARATION
                                                                                                                                                                   recognised as a receivable in the balance sheet at an amount equal to the present value of the minimum lease payments. Payments received are allocated
These financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union.
                                                                                                                                                                   between repayment of the finance lease receivable and interest income so as to reflect a constant periodic rate of return on the Group’s net investment
These are those International Accounting Standards, International Financial Reporting Standards and related Interpretations (SIC–IFRIC interpretations),
                                                                                                                                                                   outstanding in respect of the leases. A profit or loss on disposal is recognised in the income statement upon entering into a finance lease for any difference
subsequent amendments to those standards and related interpretations issued or adopted by the International Accounting Standards Board (IASB) that
                                                                                                                                                                   between the present value of the minimum lease payments and the carrying value of the property derecognised. The net investment in the lease is the
have been adopted by the European Union.
                                                                                                                                                                   gross investment in the lease discounted at the interest rate implicit in the lease.
The financial statements are prepared on the historical cost basis, except for the revaluation of investment and development properties, certain financial
assets and derivatives and deferred tax thereon. The Accounts have been prepared on a going concern basis as described in the going concern section                (F) OTHER pROpERTy, pLANT AND EquIpMENT
of the Directors’ report on page 78. The principal accounting policies adopted are set out below. The Company has elected under section 230 of the                 Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Land and buildings are stated at fair value,
Companies Act 2006 not to include its own income statement in these financial statements.                                                                           with valuation gains and losses recognised in equity.
                                                                                                                                                                   Depreciation is charged to the income statement on a straight–line basis over the estimated useful lives of items of property, plant and equipment,
(B) BASIS OF CONSOLIDATION
                                                                                                                                                                   and major components that are accounted for separately, at rates varying between 10% and 33.3% per annum, except for freehold property occupied
The consolidated financial statements of the Group incorporate the financial statements of the Company and its subsidiary undertakings.
                                                                                                                                                                   by the Group, which is depreciated where material over its expected useful life.
Subsidiary undertakings are those entities, including special purpose entities, controlled by the Company. Control exists when the Company has the
power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements     (g) OTHER FINANCIAL ASSETS
of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.                      Financial assets available for sale are stated at fair value which is determined by reference to an active market and any resultant gain or loss is
                                                                                                                                                                   recognised in the fair value reserve. Where the Group has the positive intent and ability to hold a financial asset to maturity, it is stated at amortised
Joint ventures are those entities over whose activities the Group has joint control, established by contractual agreement. Associates are those entities
                                                                                                                                                                   cost less impairment losses. Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted on an
over whose activities the Group has significant influence. Interests in joint ventures and associates are accounted for under the equity method whereby
                                                                                                                                                                   active market are classified as loans and receivables. Loans and receivables are included at amortised cost using the effective interest method, less
the consolidated balance sheet incorporates the Group’s share of the net assets of its joint ventures and associates and the consolidated income statement
                                                                                                                                                                   any impairment. Interest income is recognised by applying the effective interest rate, except for short–term receivables when the recognition of
includes the Group’s share of the joint ventures’ and associates’ profit or loss after tax for the period. The consolidated financial statements include the
                                                                                                                                                                   interest would be immaterial. Financial assets are assessed for indicators of impairment at each balance sheet date. Mezzanine loan investments
Group’s share of the total recognised gains and losses of joint ventures and associates on an equity accounted basis.
                                                                                                                                                                   comprise a loan principal, which attracts a rate of interest and is accounted for as loans and receivable, and a profit participation element which is
Where the Group has contractual relationships to share assets with other entities (jointly controlled assets) the Group’s share of the individual items            treated as an embedded derivative and classified as held for trading. The embedded derivative is held at fair value determined by reference to a
of assets, liabilities, income and expenses are recognised in the financial statements and classified according to their nature.                                     prudent estimate of the profit participation that will be ultimately receivable, discounted where material. Financial assets are impaired where there
                                                                                                                                                                   is objective evidence that, as a result of one or more events that occurred after initial recognition, the estimated future cash flows of the investment
Where necessary, adjustments are made to the results of subsidiaries, joint ventures and associates to bring their accounting policies into line with those
                                                                                                                                                                   have been adversely affected.
used by the Group. Intra–Group transactions, balances, income and expense are eliminated on consolidation, where appropriate.
Business combinations are accounted for under the acquisition method. Any discount between the cost of the acquisition and the fair value of the Group’s           (H) TRADINg pROpERTIES
share of the net assets of the acquired subsidiary, joint venture or associate at the effective date of acquisition is credited to the income statement in         Trading properties are held as current assets and are shown at the lower of cost and net realisable value. Net realisable value is the estimated selling
the period of acquisition while any excess is recognised as goodwill. Goodwill is reported in the balance sheet as an intangible asset or included within          price at completion less the estimated costs of completion including the estimated costs necessary to make the sale.
associates and joint ventures, as appropriate. Goodwill is subject to annual impairment reviews and is stated at cost less any impairment.
                                                                                                                                                                   (I) TRADE AND OTHER RECEIvABLES
The gain or loss on disposal of subsidiaries, joint ventures and associates is calculated by reference to the Group’s share of the net assets at the date
                                                                                                                                                                   Trade and other receivables are stated at cost less any impairment.
of disposal including the attributable amount of goodwill which has not been impaired.
                                                                                                                                                                   (J) CASH AND CASH EquIvALENTS
(C) FOREIgN CuRRENCy TRANSLATION
                                                                                                                                                                   Cash and cash equivalents comprise cash balances and call deposits. Cash equivalents are short–term, highly liquid investments that are readily convertible
At entity level, transactions denominated in foreign currencies are translated into the relevant functional currency at the exchange rate ruling on the date
                                                                                                                                                                   to a known amount of cash and which are subject to an insignificant risk of changes in value. Bank overdrafts that are repayable on demand and form an
the transaction is recorded. Monetary assets and liabilities denominated in foreign currencies are re–translated at the exchange rate ruling at the balance
                                                                                                                                                                   integral part of the Group’s cash management are included as a deduction from cash and cash equivalents for the purpose of the statement of cash flows.
sheet date or, if hedged, at the exchange rate under the related hedging transaction and the resultant exchange differences are dealt within the income
statement. On consolidation, the results of overseas companies are translated into Sterling at the average exchange rate for the period and their assets
                                                                                                                                                                   (k) DERIvATIvE FINANCIAL INSTRuMENTS
and liabilities are translated into Sterling at the exchange rate ruling at the balance sheet date. Exchange differences arising from the translation of foreign
                                                                                                                                                                   Derivative financial instruments utilised by the Group are interest rate and property derivative swaps and caps and forward exchange contracts against
operations, and of related hedges, are taken to the translation reserve. They are released into the income statement upon disposal.
                                                                                                                                                                   known transactions. The Group does not enter into derivative contracts for solely speculative purposes. Instruments are used for hedging purposes to
In the cash flow statement, cash flows denominated in foreign currencies are translated into Sterling at the average exchange rate for the period.                   alter the risk profile of an existing underlying exposure of the Group in line with its risk management policies. Amounts payable or receivable in respect
                                                                                                                                                                   of interest rate swaps are recognised as adjustments to interest expense over the period of the contracts.
(D) INvESTMENT pROpERTy
                                                                                                                                                                   Changes in the fair value of derivative financial instruments that are designated and effective as hedges of future cash flows are recognised directly
Investment properties, including freehold and long leasehold properties, are those which are held either to earn rental income or for capital appreciation
                                                                                                                                                                   in equity and the ineffective portion is recognised immediately in the income statement. If the cash flow hedge of a firm commitment or forecasted
or both. Investment properties include property that is being constructed or developed for future use as an investment property. Investment properties
                                                                                                                                                                   transaction results in the recognition of an asset or a liability, then, at the time the asset or liability is recognised, the associated gains or losses on the
are initially measured at cost, including transaction costs. After initial recognition investment properties are carried at their fair values, based on annual
                                                                                                                                                                   derivative that had previously been recognised in equity are included in the initial measurement of the asset or liability.
market valuations as determined by independent valuers.
                                                                                                                                                                   Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognised in the income statement as they arise.
Any surplus or deficit on revaluation is recognised in the income statement as a valuation gain or loss.
                                                                                                                                                                   Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, exercised, or no longer qualifies for hedge accounting.
When the Group begins to redevelop an existing investment property with a view to sale, the property is transferred to trading properties and held
                                                                                                                                                                   At that time, any cumulative gain or loss on the hedging instrument recognised in equity is retained in equity until the forecasted transaction occurs.
as a current asset. The property is re–measured to fair value at the date of transfer and any gain or loss is recognised in the income statement.
                                                                                                                                                                   If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is transferred to net profit or loss for the period.
The re–measured amount becomes the deemed cost at which the property is then carried in trading properties.
                                                                                                                                                                   Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and characteristics are
(E) LEASES                                                                                                                                                         not closely related to those of host contracts and the host contracts are not carried at fair value, with gains or losses reported in the income statement.
Leases to tenants where substantially all the risks and rewards of ownership are retained by the Group as lessor, are classified as operating leases.
Payments made under operating leases, including prepayments, and net of any incentives provided by the Group, are charged to the income statement                  (L) TRADE AND OTHER pAyABLES
on a straight–line basis over the period of the lease.                                                                                                             Trade and other payables are stated at cost.
Where a long leasehold property is held as an investment property, it is initially recognised at an amount equal to the sum of the premium paid on
                                                                                                                                                                   (M) BORROWINgS AND OTHER FINANCIAL LIABILITIES
acquisition and the present value of minimum ground rent payments. The corresponding rent liability to the freeholder is included in the balance sheet
                                                                                                                                                                   Borrowings and other financial liabilities are recognised initially at fair value, less attributable transaction costs. Subsequent to initial recognition,
as a finance lease obligation.
                                                                                                                                                                   borrowings and other financial liabilities are stated at amortised cost with any difference between cost and redemption value being recognised
                                                                                                                                                                   in the income statement over the period of the borrowings on an effective interest basis.
Grosvenor Annual Report 2010                           Accounts Notes to the financial statements                                                           88    Grosvenor Annual Report 2010                          Accounts Notes to the financial statements                                                         89
www.grosvenor.com                                                                                                                                                 www.grosvenor.com




1 Accounting policies continued                                                                                                                                   1 Accounting policies continued

(N) EMpLOyEE BENEFITS                                                                                                                                             (S) gOvERNMENT gRANTS
Obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement as incurred.                              An unconditional government grant is recognised in the income statement as revenue when the grant becomes receivable. Any other government grant
                                                                                                                                                                  is recognised in the balance sheet initially as deferred income when there is reasonable assurance that it will be received and that the Group will comply
The Group’s net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit
                                                                                                                                                                  with the conditions attaching to it. Grants that compensate the Group for expenses incurred are recognised as revenue in the income statement on a
that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value.
                                                                                                                                                                  systematic basis in the same periods in which the expenses are incurred. Grants that compensate the Group for the cost of an asset are deducted from
The calculation is performed by an actuary using the projected unit credit method. The future benefit liability is offset by the fair value of the pension         the carrying amount of the asset.
plan assets at the balance sheet date.
                                                                                                                                                                  (T) ADOpTION OF STANDARDS
The expected annual charge for the defined benefit pension costs as estimated by the actuary is included in the income statement and comprises
                                                                                                                                                                  The Group adopted the following new and amended IFRS and IFRIC interpretations during the year. Their adoption did not have any material effect
the current service cost, the interest cost on the future benefit liability and the expected return on plan assets.
                                                                                                                                                                  on the financial performance or position of the Group:
Adjustments between expectation and actual, together with all actuarial adjustments, are recognised in full in the year in which they arise and are
                                                                                                                                                                  —   Amendment to IFRS 1, First–time Adoption of International Financial Reporting Standards
credited or debited directly to reserves.
                                                                                                                                                                  —   Amendment to IFRS 2, Share Based Payment
                                                                                                                                                                  —   IFRS 3 (revised), Business Combinations
(O) REvENuE
                                                                                                                                                                  —   IAS 27 (revised), Consolidated and Separate Financial Statements
The Group’s revenue comprises rental income, service charges and other recoverables from tenants, income from provision of services including
                                                                                                                                                                  —   Amendment to IAS 39, Financial Instruments: Recognition and Measurement
property management fees, development fees and fund management fees, proceeds of sales of its trading properties and development income.
                                                                                                                                                                  —   IFRIC 17, Distributions of Non–cash Assets to Owners
Revenue from development is recognised in the income statement in proportion to the stage of completion of the transaction at the balance sheet
                                                                                                                                                                  The following standards and interpretations have been issued but are not yet effective:
date. Revenue is not recognised if there are significant uncertainties regarding recovery of the consideration due. Provision is made for anticipated
development losses.                                                                                                                                               —   IFRS 9 Financial Instruments
                                                                                                                                                                  —   Amendment to IAS 24 Related Party Disclosures
Rental income from investment property leased out under an operating lease is recognised in the income statement on a straight–line basis over
                                                                                                                                                                  —   Amendment to IAS 32 Financial Instruments: Presentation
the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income over the life of the lease.
                                                                                                                                                                  —   Amendment to IFRIC 14 The Limit on a Defined Benefit Asset
Revenue from the sale of trading properties is recognised in the income statement when the significant risks and rewards of ownership have been                    —   IFRIC 19 Extinguishing Liabilities with Equity Instruments
transferred to the buyer, which is usually at completion.
                                                                                                                                                                  The Directors anticipate that the adoption of these standards and interpretations will have no material impact on the financial statements of the Group
Performance fees receivable from funds are recognised in income when it is considered probable that a performance fee will be received and that                   in the period of initial application.
fee can be reliably estimated. The amount of the performance fee recognised is the lower of the fee that has accrued at the balance sheet date
and a prudent estimate of the fee that will be receivable at the end of the life of the fund. Where material, performance fees are discounted with                (u) SIgNIFICANT JuDgEMENTS AND kEy ESTIMATES
any unwinding of the discount being recognised in interest income.                                                                                                i) property valuations
                                                                                                                                                                  Investment properties are carried at market value in accordance with valuations carried out by independent valuers. Valuations are based on a number
(p) ExpENSES                                                                                                                                                      of key assumptions including an estimate of future rental income and the appropriate discount rate. For investment properties under development, key
Rental payments made under operating leases are recognised in the income statement on a straight–line basis over the term of the lease. Lease                     judgements also include estimates of future development costs.
incentives received are recognised in the income statement as an integral part of the total lease expense on a straight–line basis over the life of the lease.
                                                                                                                                                                  Trading properties are carried at the lower of cost and net realisable value. Net realisable value requires judgement in estimating the future net realisable
Minimum lease payments on finance leases are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge               proceeds and costs to complete for each trading property.
is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent
                                                                                                                                                                  ii) Development provisions
rents are charged as expenses in the periods in which they are incurred.
                                                                                                                                                                  Provisions for losses on developments are based on estimates arising from a detailed review of the remaining costs to complete each project and
                                                                                                                                                                  investment value at completion.
(q) BORROWINg COSTS
Borrowing costs relating to the financing of development properties, major improvements to investment properties and trading properties that require               iii) Leases
substantial periods of time to bring into saleable condition are capitalised. Borrowing costs are calculated by reference to the actual rate payable on           Classification of leases between finance leases and operating leases requires a judgement to be made regarding the extent to which the risks and rewards
borrowings specific to a project or, where a project is financed out of general funds, to the average rate for all borrowings. Borrowing costs are capitalised      of ownership are transferred to the lessee.
from the commencement of the project, until the date of practical completion of the project.
                                                                                                                                                                  Where operating lease premiums are received in exchange for the grant of a long leasehold interest that is classified as an operating lease, the related
All other borrowing costs are recognised in the Group income statement in the period in which they are incurred.                                                  profit is recognised over the term of the lease. Many of the transactions giving rise to deferred lease premiums took place a number of years ago before
                                                                                                                                                                  the requirement to spread profit recognition; the Group has had to apply its judgement to estimate certain of the lease premium deferrals and associated
(R) INCOME TAx                                                                                                                                                    deferred tax assets.
Income tax on the profit and loss for the year comprises current and deferred tax including tax on capital gains. Income tax is recognised in the income
                                                                                                                                                                  iv) performance fees
statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
                                                                                                                                                                  Recognition of performance fees receivable from funds requires estimates to be made regarding the performance of funds over the duration of the
Current tax is the expected tax payable on the taxable income for the year, and any adjustment to tax payable in respect of previous years.                       performance period, and, where performance is measured against relative benchmarks that have not yet been published, estimates of the expected
                                                                                                                                                                  benchmark returns.
Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial     v) Defined benefit pension schemes
recognition of assets and liabilities that affect neither accounting nor taxable profit and differences relating to investments in subsidiaries to the extent      The balance sheet assets and liabilities and the expected annual charge in respect of defined benefit pension plans are determined according to estimates
that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or              carried out by actuaries on the basis of assumptions agreed by the Board. The key assumptions underlying these calculations are set out in Note 11.
settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the balance sheet date. The Group provides
                                                                                                                                                                  vi) Taxation
deferred tax on investment properties by reference to the tax that would be due on the ultimate sale of the properties. Recognition on this basis means
                                                                                                                                                                  The Group applies judgement in the application of taxation regulations and makes estimates in calculating current income tax and deferred tax assets
that, where applicable, indexation allowance is taken into account in determining the tax base cost.
                                                                                                                                                                  and liabilities, including the likely availability of future taxable profits against which deferred tax assets can be utilised.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised.
Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.
Grosvenor Annual Report 2010                          Accounts Notes to the financial statements                                                                90      Grosvenor Annual Report 2010                          Accounts Notes to the financial statements                                            91
www.grosvenor.com                                                                                                                                                       www.grosvenor.com




2 foreign currency                                                                                                                                                      3 segmental analysis continued
The principal exchange rates used to translate into Sterling the results, assets, liabilities and cash flows of overseas companies were as follows:                      2010

                                                                                                              Average rate                   Year end rate                                                        Britain &                 Continental       Asia                          Fund          Not
                                                                                                                                                                                                                   Ireland      Americas        Europe      Pacific     Australia      Management    allocated       Total
                                                                                                           2010                2009       2010                  2009
                                                                                                                                                                                                                        £m           £m             £m         £m           £m                £m          £m          £m
                                                                                                             £1                  £1         £1                    £1

US Dollars                                                                                                1.55                 1.55       1.57                   1.61   Balance sheet (proportional basis)
Canadian Dollars                                                                                          1.59                  1.77      1.56                  1.69    Investment property                      2,174.6          611.1      1,508.8       376.7           259.6            4.4           —     4,935.2
Euros                                                                                                     1.16                  1.11      1.17                   1.13   Investment property
Australian Dollars                                                                                        1.67                 1.99       1.53                  1.80       under development                        61.0            —           87.2           —               —             —            —       148.2
Hong Kong Dollars                                                                                        12.02                12.06      12.17                 12.52    Trading property                           213.6          40.1          66.9         19.1             5.8            —            —       345.5
Chinese Renminbi                                                                                         10.47                10.62     10.32                  11.02    Other financial assets                          —           9.2            —           6.2              —           15.7           —         31.1
Japanese Yen                                                                                            136.18               145.73    126.98                150.34     Total property assets                    2,449.2        660.4        1,662.9      402.0            265.4           20.1           —     5,460.0
                                                                                                                                                                        Net debt                                  (604.9)       (113.8)        (811.5)    (179.3)           (50.1)         15.9         (3.9)   (1,747.6)
                                                                                                                                                                        Deferred tax                              (320.4)        (49.1)       (230.3)      (10.9)            (19.1)         2.8        12.8       (614.2)
3 segmental analysis                                                                                                                                                    Other net liabilities                     (206.5)         (17.1)       (101.1)      (0.9)             (7.9)        (6.8)       18.0       (322.3)
The Group’s reportable segments are the five regional Operating Companies and Grosvenor Fund Management. These operating segments reflect the                             Net assets                               1,317.4        480.4          520.0       210.9           188.3           32.0        26.9     2,775.9
components of the Group that are regularly reviewed by the Group Chief Executive to allocate resources and assess performance. The accounting policies                  Investment property additions               79.0          28.8           43.1      185.1              1.6             —           —       337.6
of the reportable segments are consistent with the Group accounting policies detailed in Note 1.

2010                                                                                                                                                                    2009

                                                                                                                                                                                                                  Britain &                 Continental       Asia                          Fund          Not
                                          Britain &                    Continental          Asia                              Fund           Not
                                                                                                                                                                                                                   Ireland      Americas        Europe      Pacific     Australia      Management    allocated        Total
                                           Ireland       Americas          Europe         Pacific        Australia       Management     allocated                Total
                                                                                                                                                                                                                        £m           £m             £m         £m           £m                £m          £m           £m
                                                £m            £m               £m            £m              £m                 £m           £m                   £m

Income statement                                                                                                                                                        Income statement
Gross rental income                         65.4           25.5               2.7           5.0            16.2                   —          —                114.8     Gross rental income                          77.4         32.2             3.7        5.1           14.8              —           —        133.2
Property outgoings                                                                                                                                                      Property outgoings
   (excluding major refurbishments)         (21.5)          (6.1)            (2.5)         (2.1)           (2.8)                  —          —                (35.0)       (excluding major refurbishments)         (26.1)         (5.8)          (1.9)      (2.8)           (2.5)            —           —        (39.1)

Net rental income                           43.9            19.4             0.2            2.9            13.4                 —            —                 79.8     Net rental income                            51.3         26.4             1.8       2.3             12.3            —           —          94.1
Fees and other income                        6.6             5.2             1.3            0.9             0.5               40.9         (1.4)               54.0     Fees and other income                         5.9          6.9             1.5       0.4              0.3          20.7        (0.6)        35.1
(Loss)/profit on trading and                                                                                                                                             (Loss)/profit on trading and
   development properties                    (4.3)          (2.5)            0.9             —              0.2                  —          —                   (5.7)      development properties                   (12.5)         (0.2)            —          —             11.3            —           —           (1.4)
Administrative expenses                     (13.4)         (14.1)           (4.5)          (9.5)           (4.1)              (29.1)     (11.5)               (86.2)    Administrative expenses                     (14.7)        (13.3)          (7.1)     (11.3)           (4.2)        (24.7)       (9.2)       (84.5)
Net financing costs                         (24.0)           (5.7)           (1.6)          (1.5)           (4.1)                0.5         —                 (36.4)    Net financing costs                         (20.3)           (7.5)        (0.2)       (2.4)           (4.1)          0.1        (0.6)       (35.0)
Revenue profit/(loss) of joint ventures                                                                                                                                  Revenue profit/(loss) of joint ventures
   and associates (Note 23)                    7.2           6.7            32.4           15.2              2.1                0.2        (5.1)               58.7        and associates (Note 23)                   3.6           6.6          37.6         2.1            (0.3)         (0.2)        4.5         53.9

group revenue profit/(loss)                  16.0             9.0            28.7            8.0             8.0                12.5      (18.0)                64.2     group revenue profit/(loss)                   13.3          18.9          33.6        (8.9)           15.3           (4.1)      (5.9)        62.2

Net gains/(losses) on revaluation                                                                                                                                       Net gains/(losses) on revaluation
  and sale of investment properties        257.6            26.7            (0.5)           2.9             5.7                   —          —               292.4        and sale of investment properties         24.6         (111.9)         (4.0)       31.7          (28.0)            —           —         (87.6)
Major refurbishment costs                   (6.1)             —               —              —               —                    —          —                 (6.1)    Major refurbishment costs                    (6.7)           —              —          —               —             —           —          (6.7)
Net losses on other investments              (1.5)            —               —              —               —                    —          —                 (1.5)    Net losses on other investments              (9.4)         (3.1)            —        (0.1)             —           (0.2)         —         (12.8)
Derivative fair value adjustments           (0.5)            0.2              —             1.3            (0.2)                  —          —                 0.8      Derivative fair value adjustments             0.6           0.2             —        (5.3)           1.6             —          0.3         (2.6)
Other gains/(losses) of joint ventures                                                                                                                                  Other (losses)/gains of joint ventures
  and associates (Note 23)                  60.7            17.1            19.9           (0.4)             1.1               (0.1)         —                 98.3       and associates (Note 23)                  (37.4)        (50.1)      (146.9)       15.0             (1.8)         (0.6)          —       (221.8)

profit/(loss) before tax                    326.2           53.0             48.1           11.8            14.6                12.4      (18.0)              448.1      (Loss)/profit before tax                     (15.0)      (146.0)        (117.3)      32.4            (12.9)         (4.9)       (5.6)      (269.3)

Tax and non-controlling interests                                                                                                                                       Tax and non-controlling interests
  in joint ventures and associates                                                                                                                            (53.3)      in joint ventures and associates                                                                                                          33.5

profit before tax reported                                                                                                                                               Loss before tax reported in the
  in the income statement                                                                                                                                    394.8        income statement                                                                                                                        (235.8)
Grosvenor Annual Report 2010                             Accounts Notes to the financial statements                                                  92      Grosvenor Annual Report 2010                        Accounts Notes to the financial statements                                                      93
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3 segmental analysis continued                                                                                                                               6 Gross rental income
2009                                                                                                                                                                                                                                                                                              2010           2009
                                                                                                                                                                                                                                                                                                   £m              £m
                                           Britain &                   Continental            Asia                      Fund              Not
                                            Ireland        Americas        Europe           Pacific    Australia   Management        allocated        Total   Gross lease payments receivable                                                                                                     113.0          129.1
                                                 £m             £m             £m              £m          £m             £m              £m           £m    Amortisation of capitalised lease incentives                                                                                         (0.1)          (0.5)
Balance sheet (proportional basis)                                                                                                                           Amortisation of deferred lease premiums                                                                                               1.9            4.6
Investment property                       2,061.5           533.0       1,623.5            251.5       251.4            4.3                —     4,725.2                                                                                                                                        114.8           133.2
Investment property
   under development                          2.4               —          116.6              —            —              —                —       119.0     Investment properties are leased out under operating leases. The majority of operating lease terms fall in the range between six months and 20 years.
Trading property                            160.1             21.2         125.9            34.9          3.6             —                —       345.7
Other financial assets                          —             11.1            —              4.9           —           16.0                —        32.0     Total contingent rents included in gross rental income amounted to £0.1m (2009: £0.1m).

Total property assets                     2,224.0           565.3      1,866.0             291.3       255.0           20.3              —        5,221.9
Net debt                                   (658.7)          (35.6)     (1,032.7)           (95.8)       (61.6)         12.0           110.1      (1,762.3)   7 property outgoings
Deferred tax                                (277.0)          (35.1)      (214.4)           (23.8)       (13.2)           1.3            2.5        (559.7)
                                                                                                                                                                                                                                                                                                  2010           2009
Other net liabilities                      (224.8)           (27.0)       (61.3)             (8.7)      (16.7)          (9.6)          (8.5)      (356.6)                                                                                                                                          £m              £m

Net assets                                1,063.5           467.6          557.6           163.0       163.5           24.0           104.1      2,543.3     Service charge income                                                                                                                 9.7           10.5
Investment property additions                 16.1            13.4          65.2                3.9       1.4           0.1                —       100.1     Service charge expenses                                                                                                             (10.2)         (10.5)
                                                                                                                                                             Net service charge expenses                                                                                                          (0.5)            —
                                                                                                                                                             Major refurbishment costs                                                                                                             (6.1)         (6.7)
4 Revenue profit                                                                                                                                             Other property operating expenses                                                                                                   (34.5)         (39.1)
The Group uses revenue profit as its primary measure of underlying operating performance. The calculation of revenue profit and its reconciliation to profit    Total net property outgoings                                                                                                        (41.1)         (45.8)
before tax is set out below.
                                                                                                                                                             Operating expenses associated with unlet properties totalled £2.3m (2009: £2.0m).
                                                                                         2010                                      2009

                                                                                                                                                             8 other income
                                                                                     Share of joint                             Share of joint
                                                                                     ventures and                               ventures and
                                                                           group       associates        Total         Group      associates         Total
                                                                              £m                £m         £m             £m               £m          £m                                                                                                                                         2010           2009
                                                                                                                                                                                                                                                                                                   £m              £m
Gross rental income                                                       114.8            169.2      284.0           133.2          184.9         318.1
Property outgoings (excluding major refurbishments)                       (35.0)           (42.7)      (77.7)          (39.1)         (37.9)       (77.0)    Fund management and asset management fees                                                                                            47.5           29.0
                                                                                                                                                             Project management fees                                                                                                               2.9            3.3
Net rental income (before major refurbishments)                            79.8            126.5      206.3            94.1           147.0        241.1     Other income                                                                                                                          3.6            2.8
Fees and other income                                                      54.0              18.6       72.6           35.1             18.8        53.9
(Loss)/profit on trading and development properties                         (5.7)             1.9       (3.8)           (1.4)          (10.7)       (12.1)                                                                                                                                       54.0            35.1
Administrative expenses                                                   (86.2)           (37.0)     (123.2)         (84.5)          (39.3)      (123.8)
Net financing costs (excluding derivative fair value adjustments)         (36.4)            (51.3)     (87.7)         (35.0)          (61.9)       (96.9)
Revenue profit                                                               5.5            58.7        64.2            8.3            53.9         62.2     9 Administrative expenses
                                                                                                                                                                                                                                                                                                  2010           2009
                                                                                                                                                                                                                                                                                                   £m              £m
Reconciliation of revenue profit to profit before tax:
Revenue profit                                                               5.5            58.7        64.2            8.3            53.9         62.2     Staff costs                                                                                                                         60.3            56.6
Joint ventures and associates:                                                                                                                               Office costs                                                                                                                        13.9            15.0
   — Revenue profit                                                            —           (58.7)      (58.7)             —           (53.9)        (53.9)   Auditors’ remuneration — audit services                                                                                              1.2             1.3
   — Equity accounted profit/(loss)                                            —           103.7       103.7              —         (134.4)       (134.4)                            — other services                                                                                             0.1             0.1
Net gains/(losses) on revaluation and sale                                                                                                                   Other professional fees                                                                                                             10.7             7.2
   of investment properties                                              292.4                   —    292.4           (87.6)               —       (87.6)    Other administrative expenses                                                                                                         —              4.3
Major refurbishment costs                                                  (6.1)                 —      (6.1)          (6.7)               —        (6.7)
                                                                                                                                                                                                                                                                                                 86.2            84.5
Net losses on other investments                                            (1.5)                 —      (1.5)         (12.8)               —       (12.8)
Derivative fair value adjustments                                          0.8                   —      0.8            (2.6)               —        (2.6)
                                                                                                                                                             All of the Group’s Operating Companies were audited by Deloitte LLP and other member firms of Deloitte Touche Tohmatsu Limited. £0.5m (2009: £0.5m)
Profit/(loss) before tax                                                  291.1            103.7      394.8          (101.4)        (134.4)       (235.8)    of the total audit fee is estimated to relate to the audit of the Group and £0.7m (2009: £0.8m) to the audit of the Group’s subsidiaries. The Company’s
                                                                                                                                                             audit fees (£0.1m) were borne by another Group company (2009: £0.1m). Amounts paid to other accountancy firms in 2010 totalled £1.9m (2009: £1.3m).

5 Revenue
                                                                                                                                        2010         2009
                                                                                                                                         £m            £m

Rental income                                                                                                                        114.8         133.2
Income from trading and development properties                                                                                        36.2         109.3
Service charge income                                                                                                                  9.7          10.5
Other income                                                                                                                          54.0          35.1
                                                                                                                                     214.7         288.1
Grosvenor Annual Report 2010                           Accounts Notes to the financial statements                                                         94     Grosvenor Annual Report 2010                         Accounts Notes to the financial statements                                                 95
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10 employee information                                                                                                                                          11 Retirement benefit schemes continued
                                                                                                                                        2010              2009
                                                                                                                                         £m                 £m
                                                                                                                                                                 DEFINED CONTRIBuTION SCHEMES
                                                                                                                                                                 The Group operates a number of defined contribution retirement benefit schemes. The Group contributes a percentage of salary into defined contribution
Staff costs                                                                                                                                                      schemes to fund the benefits. The assets of the schemes are held separately from those of the Group in funds under the control of independent pension
Wages and salaries                                                                                                                     57.8              51.2    providers. The only obligation of the Group with respect to the defined contribution schemes is to make the specified contributions.
Social security contributions                                                                                                           5.5               5.8
Other staff costs                                                                                                                       5.3               7.3    The total cost of defined contribution pension schemes charged to the income statement was £2.9m (2009: £3.1m).

pension costs                                                                                                                                                    The amounts recognised in the income statement in respect of defined benefit schemes are:
Contributions to defined contribution plans                                                                                              2.9              3.1
                                                                                                                                                                                                                                                                                                   2010          2009
Net cost of defined benefit plans                                                                                                        5.9              4.9                                                                                                                                       £m             £m

                                                                                                                                       77.4              72.3    Current service cost                                                                                                              5.1            3.7
Included in:                                                                                                                                                     Interest cost                                                                                                                     8.8            7.6
Administrative expenses                                                                                                                60.3              56.6    Expected return on scheme assets                                                                                                 (8.0)          (6.4)
Property operating expenses                                                                                                             8.5                7.7                                                                                                                                     5.9            4.9
Development costs                                                                                                                       8.6               8.0
                                                                                                                                       77.4              72.3    The amounts included in the balance sheet arising from the group’s obligations in respect of defined benefit schemes are:
                                                                                                                                                                                                                                                                                                   2010          2009
Employee numbers                                                                                                                                                                                                                                                                                    £m             £m

                                                                                                           At end of year                   Average              Present value of unfunded obligations                                                                                            (13.3)         (11.9)
                                                                                                         2010                 2009      2010              2009   Present value of funded obligations                                                                                            (158.2)        (140.5)
                                                                                                       Number               Number    Number            Number
                                                                                                                                                                 Present value of total defined benefit obligations                                                                             (171.5)        (152.4)
Britain & Ireland                                                                                        245                 280        263               283    Fair value of scheme assets                                                                                                    134.4           115.2
Americas                                                                                                  62                  58         60                63
                                                                                                                                                                 Defined benefit pension deficit                                                                                                  (37.1)        (37.2)
Asia Pacific                                                                                              44                  39         43                41
Australia                                                                                                 17                  19          17               22    The net deficit arises in the following regions:
Fund Management                                                                                          135                 135        135               147    Britain & Ireland                                                                                                               (18.6)         (24.1)
Holding Company and shared services                                                                       44                  31         44                33    USA                                                                                                                             (10.2)          (9.2)
                                                                                                                                                                 Canada                                                                                                                           (5.8)           (2.1)
                                                                                                         547                  562       562              589
                                                                                                                                                                 Australia                                                                                                                        (2.5)          (1.8)
The Company employs nil staff (2009: nil).                                                                                                                                                                                                                                                        (37.1)        (37.2)

                                                                                                                                                                 Movements in the present value of defined benefit obligations are:
11 Retirement benefit schemes
                                                                                                                                                                                                                                                                                                   2010          2009
DEFINED BENEFIT SCHEMES                                                                                                                                                                                                                                                                             £m             £m
The Group operates defined benefit pension schemes in Britain & Ireland, the USA, Canada and Australia as explained on page 75. Benefits in the                     At 1 January                                                                                                                    152.4          120.9
scheme in USA were frozen in 2007 and the scheme in Canada was closed to new entrants in 2008.                                                                   Current service cost                                                                                                              5.1            3.7
The defined benefit schemes are funded and are administered by independent trustees. Independent qualified actuaries complete valuations of the                     Interest cost                                                                                                                     8.8            7.6
schemes at least every three years and in accordance with their recommendations annual contributions are paid to the schemes so as to secure the                 Actuarial losses                                                                                                                   7.1          25.7
benefits set out in the rules.                                                                                                                                    Benefits paid                                                                                                                    (5.4)          (5.0)
                                                                                                                                                                 Exchange movements                                                                                                                3.5           (0.5)
The Britain & Ireland scheme is a multi–employer scheme because it provides pensions for both the Group and employees of other entities owned
by the Shareholders. The Group accounts for its proportionate share of the defined benefit obligation, plan assets and cost of this scheme, based on the           At 31 December                                                                                                                  171.5          152.4
proportion of the accrued liabilities that relate to the Group’s employees.
                                                                                                                                                                 Analysis of the scheme liabilities:
Actuarial valuations were last carried out at the following dates:
                                                                                                                                                                                                                                                                                                   2010          2009
Britain & Ireland                                                           31 December 2008                                                                                                                                                                                                        £m             £m
USA                                                                         31 December 2009
                                                                                                                                                                 Britain & Ireland                                                                                                               117.6          107.5
Canada                                                                      31 December 2007
                                                                                                                                                                 USA                                                                                                                             20.3            18.5
Australia                                                                   30 June 2008
                                                                                                                                                                 Canada                                                                                                                           26.7           21.1
All the valuations have been updated to 31 December 2010. The results of these valuations together with the key assumptions used are set out below.              Australia                                                                                                                         6.9            5.3
In addition to the defined benefit schemes set out above, the Group operates unfunded defined benefit schemes in Britain & Ireland and the USA                       At 31 December                                                                                                                  171.5          152.4
to satisfy pension commitments not catered for by the funded schemes.
The Group has agreed with the Trustees of the Britain & Ireland scheme to make contributions, in addition to payments in respect of the continuing
accrual of benefits, of £3.7m per annum until 2018 to fund the scheme deficit. The level of contributions will be reviewed following the next triennial
valuation due at 31 December 2011.
Grosvenor Annual Report 2010                      Accounts Notes to the financial statements                                  96       Grosvenor Annual Report 2010                            Accounts Notes to the financial statements                                                                97
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11 Retirement benefit schemes continued                                                                                                11 Retirement benefit schemes continued
Movements in fair value of scheme assets were:                                                                                         2010

                                                                                                                     2010     2009                                                                                                        Britain &
                                                                                                                      £m        £m                                                                                                         Ireland               uSA             Canada              Australia

At 1 January                                                                                                        115.2     91.4     Discount rate                                                                                        5.4%              5.4%               5.5%                 5.0%
Expected return on plan assets                                                                                        8.0      6.4     Expected return on scheme assets                                                                     6.8%              7.0%               4.7%                 6.5%
Actuarial gains                                                                                                       6.5     13.7     Expected rate of salary increase                                                                     6.6%                n/a              3.5%                 4.0%
Contributions by the employer                                                                                         7.4      8.4     Expected rate of future pension increase                                                             3.5%              3.0%               2.5%                 2.0%
Benefits paid                                                                                                        (5.3)    (5.0)    Inflation                                                                                             3.5%              3.0%               2.5%                 2.5%
Exchange movements                                                                                                    2.6      0.3
At 31 December                                                                                                      134.4    115.2     2009

                                                                                                                                                                                                                                           Britain &
Analysis of the scheme assets and the expected rates of return:                                                                                                                                                                             Ireland              USA             Canada               Australia

2010                                                                                                                                   Discount rate                                                                                        5.6%               5.9%              6.3%                  5.2%
                                                                                                                                       Expected return on scheme assets                                                                     7.2%               7.8%              4.9%                  6.5%
                                                          Equities                     Bonds                Other
                                                                                                                              Total    Expected rate of salary increase                                                                     6.7%                 n/a             3.5%                  4.0%
                                                         %             £m         %             £m     %               £m       £m
                                                                                                                                       Expected rate of future pension increase                                                             3.6%               3.0%              2.8%                  1.8%
Britain & Ireland                                       7.4          77.7        4.6           20.1   4.2             1.2    99.0      Inflation                                                                                            3.6%               3.0%              2.8%                  2.5%
USA                                                     9.2           7.7        5.1            2.3   3.5             0.1    10.1
Canada                                                  8.5           8.7        3.6            6.0   2.2             6.2    20.9
Australia                                               8.2           2.9        5.2            0.9   6.3             0.6     4.4
                                                                                                                                                                                                                                                       Male                                 Female
                                                                     97.0                      29.3                   8.1    134.4                                                                                                            2010              2009               2010                  2009

2009                                                                                                                                   Life expectancy of a 65–year–old today
                                                                                                                                          Britain & Ireland                                                                                  25.3               25.1              26.8                   26.7
                                                          Equities                     Bonds                Other                         USA                                                                                                19.0               18.9              20.9                   20.9
                                                                                                                               Total
                                                         %             £m         %             £m     %               £m        £m       Canada                                                                                             19.5               19.4              22.0                   22.0
                                                                                                                                          Australia                                                                                          22.2               22.1              25.0                   24.9
Britain & Ireland                                       7.9          66.4        4.7           15.7   4.4             1.3     83.4
USA                                                     9.2           7.5        5.1            1.6   3.7             0.2      9.3     Life expectancy of a 65–year–old in 20 years
Canada                                                  8.5           8.6        4.8            4.5   2.2             5.9     19.0        Britain & Ireland                                                                                  28.5               28.4              28.7                   28.6
Australia                                               8.7           2.2        6.7            0.7   6.8             0.6      3.5        USA                                                                                                19.0               18.9              20.9                   20.9
                                                                                                                                          Canada                                                                                             21.0               21.0              22.8                   22.8
                                                                     84.7                      22.5                   8.0    115.2
                                                                                                                                          Australia                                                                                          23.4               23.3              26.2                   26.1

                                                                                                                                       The sensitivity to the assumptions above of the total defined benefit obligation and approximate income statement charge is set out below.
                                                                                                                                                                                                                                                                            Total defined          Approximate
                                                                                                                                                                                                                                                                        benefit obligation        charge in 2011
                                                                                                                                                                                                                                                                                      £m                    £m

                                                                                                                                       Based on the assumptions above                                                                                                             171.5                   5.8
                                                                                                                                       Approximate impact of:
                                                                                                                                       Increase in discount rate by 0.25%                                                                                                           (7.5)                (0.4)
                                                                                                                                       Increase in inflation rate by 0.25%                                                                                                            7.5                  0.9
                                                                                                                                       Increase in life expectancy by one year at 65                                                                                                 4.7                  0.5
                                                                                                                                       Increase in return on assets by 0.25%                                                                                                          —                  (0.4)

                                                                                                                                       The history of experience gains and losses is as follows:
                                                                                                                                                                                                                              2010            2009              2008               2007                  2006
                                                                                                                                                                                                                               £m               £m                £m                 £m                    £m

                                                                                                                                       Present value of defined benefit obligation                                          (171.5)        (152.4)            (120.9)            (113.8)               (111.1)
                                                                                                                                       Fair value of scheme assets                                                          134.4           115.2               91.4             104.6                  95.3
                                                                                                                                       Deficit in the schemes                                                                (37.1)          (37.2)            (29.5)              (9.2)                (15.8)
                                                                                                                                       Experience adjustments on plan assets:
                                                                                                                                       Amount of gain/(loss)                                                                  6.5             13.7             (27.9)              (1.2)                  4.9
                                                                                                                                       Percentage of plan assets                                                            4.8%            11.9%             30.5%               1.1%                  5.1%
                                                                                                                                       Experience adjustments on plan liabilities
                                                                                                                                       Amount of (loss)/gain                                                                   (7.1)        (25.7)                7.2              5.6                   5.5
                                                                                                                                       Percentage of the present value of scheme liabilities                                 4.1%          16.9%               6.0%              4.9%                  5.0%
Grosvenor Annual Report 2010                           Accounts Notes to the financial statements                                                   98       Grosvenor Annual Report 2010                          Accounts Notes to the financial statements                                                     99
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12 Directors’ remuneration details                                                                                                                           15 net gains/(losses) on revaluation and sale of investment property
                                                                                                                                     2010           2009                                                                                                                                           2010           2009
                                                                                                                                     £000           £000                                                                                                                                            £m              £m

Aggregate remuneration:                                                                                                                                      Valuation gains on investment property                                                                                              256.7           68.5
Emoluments                                                                                                                         2,867          3,144      Valuation losses on investment property                                                                                             (16.0)         (157.2)
Performance–related bonus                                                                                                          1,609            227      Valuation gains on redevelopment properties                                                                                          12.5              —
Long–term incentive scheme                                                                                                         1,053          2,608
                                                                                                                                                             Net valuation gains/(losses) on investment property                                                                                 253.2          (88.7)
Compensation for loss of office                                                                                                        —          1,245
                                                                                                                                                             Profit on disposal of investment property                                                                                            39.2            1.1
                                                                                                                                   5,529           7,224
                                                                                                                                                                                                                                                                                                292.4            (87.6)
The total amounts payable under long–term incentive schemes comprise all amounts to which Directors became unconditionally entitled during the
year including aggregate amounts that vested as a consequence of Directors retiring.
                                                                                                                                                             16 net financing costs
The amounts above include for the highest paid Director emoluments of £598,000 (2009: £281,000), performance–related bonus of £247,000 (2009: £158,000),
                                                                                                                                                                                                                                                                                                   2010           2009
and long–term incentive plans of £84,000 (2009: £2,116,000).                                                                                                                                                                                                                                        £m              £m
Retirement benefits accrue to six Directors under defined benefit schemes sponsored by Group companies, two of whom are members of a scheme                     Dividend income                                                                                                                       0.4             0.4
that combines defined benefit and money purchase benefits. The total annual accrued pension under the defined benefit pension schemes was
£476,000 (2009: £368,000) and for the highest paid Director was £43,000 (2009: £nil). Total contributions in respect of money purchase pension               Interest income                                                                                                                       8.6             7.8
benefits were £258,000 (2009: £251,000) and for the highest paid Director were £nil (2009: £nil).                                                             Other financial income                                                                                                                1.5             1.2
                                                                                                                                                             Financial income                                                                                                                     10.1             9.0
13 net loss on trading properties                                                                                                                            Gross interest expense (including dividends on preference shares)                                                                   (41.6)          (47.6)
                                                                                                                                                             Interest capitalised                                                                                                                  0.2              5.1
                                                                                                                                     2010           2009
                                                                                                                                      £m              £m
                                                                                                                                                             Commitment and other financing costs                                                                                                 (6.0)            (2.1)

Development costs                                                                                                                  (11.0)           (6.8)    Financial expenses                                                                                                                  (47.4)         (44.6)
Proceeds from sale of trading properties                                                                                            33.0            96.2     Fair value adjustments of interest rate swaps                                                                                         0.9            (3.0)
Carrying value of trading properties sold                                                                                          (29.3)          (95.9)    (Loss)/profit on property derivatives                                                                                                (0.1)            0.4
Provision for impairment of trading properties                                                                                      (2.0)           (0.6)
                                                                                                                                                             Derivative fair value adjustments                                                                                                     0.8            (2.6)
Reversal of provision for impairment of trading properties                                                                           3.4              1.8
                                                                                                                                                             Fair value adjustments of embedded derivatives                                                                                        0.5             0.2
Uplift on trading properties completed and transferred to investment property                                                        0.2             11.3
Provision for impairment of joint venture trading properties                                                                           —             (7.4)   Total fair value adjustments                                                                                                          1.3            (2.4)
                                                                                                                                     (5.7)          (1.4)    Net financing costs                                                                                                                  (35.6)          (37.6)

The carrying value of trading properties sold includes £nil of capitalised interest (2009: £1.5m).                                                           The average rate of interest capitalised in the year was 6.5% (2009: 5.9%).
                                                                                                                                                             The fair value adjustments above include interest rate swaps which relate to cash flow hedges that are not designated as effective. The movements in fair
14 net losses on other investments                                                                                                                           value of these derivatives arise from underlying market movements and changes in time to maturity.

                                                                                                                                     2010           2009
                                                                                                                                      £m              £m     17 income tax expense
Amounts written off mezzanine loans                                                                                                    —            (3.1)    Recognised in the income statement
Loss on disposal of interests in joint ventures                                                                                      (1.5)          (9.7)
                                                                                                                                                                                                                                                                                                   2010           2009
                                                                                                                                     (1.5)         (12.8)                                                                                                                                           £m              £m

                                                                                                                                                             Current tax expense
                                                                                                                                                             UK corporation tax at 28.0% (2009: 28.0%)                                                                                             4.6           19.5
                                                                                                                                                             Overseas tax                                                                                                                          6.7           30.9
                                                                                                                                                             Adjustment for prior years                                                                                                           (9.8)           1.1
                                                                                                                                                                                                                                                                                                   1.5            51.5
                                                                                                                                                             Deferred tax expense/(credit)
                                                                                                                                                             Origination and reversal of temporary differences                                                                                    77.2          (85.0)
                                                                                                                                                             Benefit of tax losses recognised                                                                                                     (0.4)           6.5
                                                                                                                                                             Adjustment for prior years                                                                                                           (0.3)             —
                                                                                                                                                                                                                                                                                                  76.5          (78.5)
                                                                                                                                                             Total income tax expenses/(credit) in the income statement                                                                           78.0           (27.0)
 Grosvenor Annual Report 2010                               Accounts Notes to the financial statements                                                      100        Grosvenor Annual Report 2010                         Accounts Notes to the financial statements                                                    101
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 17 income tax expense continued                                                                                                                                       19 investment property
                                                                                                                                               2010            2009                                                                        Completed property                            Under development
 Deferred tax recognised in other comprehensive income                                                                                          £m               £m
                                                                                                                                                                                                                                Freehold         Leasehold          Total     Freehold        Leasehold          Total       Total
                                                                                                                                                                                                                                     £m                £m             £m           £m               £m             £m          £m
 Revaluation of property plant and equipment                                                                                                   0.9            (0.2)
 Fair value adjustments on financial instruments treated as cash flow hedges                                                                    —              0.8     At 1 January 2009                                       1,024.0           1,719.0        2,743.0            —                8.1          8.1     2,751.1
 Fair value adjustments on available for sale financial assets                                                                                 0.1            (0.8)    Acquisitions                                                 2.2              5.0             7.2          7.5                —           7.5        14.7
 Actuarial (gains)/losses on defined benefit pension schemes                                                                                  (0.1)            (2.7)   Costs capitalised                                            1.8              9.0            10.8          0.2                —           0.2        11.0
 Foreign exchange movements                                                                                                                    3.2               —     Disposals                                                (262.5)           (252.9)        (515.4)        (10.3)               —         (10.3)     (525.7)
 Total income tax recognised in other comprehensive income                                                                                     4.1             (2.9)   Revaluation losses                                        (151.0)            65.5           (85.5)        (3.2)               —          (3.2)      (88.7)
                                                                                                                                                                       Release of deferred costs                                   (0.8)             0.2            (0.6)          —                 —             —        (0.6)
 Reconciliation of effective tax rate                                                                                                                                  Depreciation of short leasehold properties                     —             (0.6)           (0.6)          —                 —             —        (0.6)
 Profit/(loss) before taxation                                                                                                              394.8           (235.8)    Transfer from/(to) redevelopment projects                   25.3              8.1            33.4        (25.3)             (8.1)       (33.4)          —
 Less: share of profit/(loss) of joint ventures and associates                                                                              (103.7)          134.4     Transfer from investment
 Add: profit/(loss) of joint ventures where the tax charge is directly attributable to the Group                                              87.2            (67.3)      properties under development                                —                 —             —         34.7                 —          34.7        34.7
 Adjusted group profit/(loss) before taxation                                                                                                378.3          (168.7)    Transfer from trading properties                            81.1              14.0          95.1           —                  —            —         95.1
                                                                                                                                                                       Transfer to other property, plant and equipment                —               (2.9)        (2.9)          —                  —            —         (2.9)
 Tax credit on adjusted Group profit/(loss) at standard UK corporation tax rate of 28.0% (2009: 28.0%)                                       105.9            (47.2)   Exchange movements                                           2.0             (11.0)         (9.0)          —                  —            —         (9.0)
 Higher tax rates on overseas earnings                                                                                                          8.3           (11.5)
 Expenses not deductible for tax purposes                                                                                                       6.1             7.6    At 31 December 2009                                       722.1           1,553.4        2,275.5           3.6               —             3.6    2,279.1
 Other items attracting no tax relief or liability                                                                                           (22.3)             1.6    Acquisitions                                               29.6              63.4           93.0           0.1              1.7            1.8      94.8
 Other timing differences                                                                                                                       2.6            14.9    Costs capitalised                                            2.6               4.4            7.0          0.1              5.8            5.9       12.9
 Reduction in tax rate                                                                                                                        (12.5)             —     Disposals                                                 (51.0)           (120.4)        (171.4)           —                —              —      (171.4)
 Adjustments in respect of prior years                                                                                                        (10.1)            7.6    Revaluation gains                                           17.8            220.2         238.0             —              12.5           12.5     250.5
                                                                                                                                                                       Release of deferred costs                                   (1.0)              0.8           (0.2)          —                —              —        (0.2)
 Total income tax expense/(credit) in the income statement                                                                                    78.0            (27.0)   Depreciation of short leasehold properties                     —              (0.8)          (0.8)          —                —              —        (0.8)
 Effective tax rate based on adjusted Group profit                                                                                         20.6%            16.0%      Transfer from/(to) redevelopment projects                    0.2             (37.4)         (37.2)        (0.2)            37.4           37.2          —
                                                                                                                                                                       Transfer to trading properties                             (2.8)                 —           (2.8)          —                 —             —        (2.8)
                                                                                                                                                                       Exchange movements                                         58.5                5.3          63.8            —                —              —        63.8
 FACTORS AFFECTINg FuTuRE TAx CHARgES
 The Emergency Budget on 22 June 2010 announced that the UK corporate tax rate will reduce from 28% to 24% over a period of four years from 2011.                      At 31 December 2010                                       776.0           1,688.9        2,464.9           3.6             57.4          61.0     2,525.9
 The first reduction in the UK corporation tax rate from 28% to 27% was enacted in Finance (No 2) Act 2010 and will be effective from 1 April 2011.
 The annual rate reductions over the four years will require the restatement of deferred tax balances, and this is likely to reduce the effective tax rate of the      Investment properties were valued at 31 December 2010 by independent external valuers on the basis of market value in accordance with generally
 Group when compared to the statutory tax rate over this period. In 2010 the overall impact of the rate change is a reduction in the tax charge of £12.5m.             accepted international valuation standards. Valuations were performed as follows:

                                                                                                                                                                                                                                                                                                                               £m
 18 property assets                                                                                                                                                    Britain & Ireland                      Freehold                              DTZ Debenham Tie Leung, Chartered Surveyors                               11.1
 The table below analyses the Group’s interests in property assets on a proportional basis, including the Group’s share of property assets in joint ventures                                                  Freehold                              CB Richard Ellis, Chartered Surveyors                                    76.8
 and associates.                                                                                                                                                                                              Long leasehold                        DTZ Debenham Tie Leung, Chartered Surveyors                          1,682.0
                                                                                                                                                                                                              Long leasehold                        CB Richard Ellis, Chartered Surveyors                                     0.8
                                                                                                                                               2010            2009    Americas                               Freehold                              Cushman & Wakefield Le Page, Chartered Surveyors                        222.4
                                                                                                                               Note             £m               £m
                                                                                                                                                                                                              Freehold                              Altus Group, Research valuation and advisory                            171.8
 Investment property                     — Group                                                                                19        2,464.9          2,275.5     Continental Europe                     Freehold                              Cushman & Wakefield, Chartered Surveyors                                 40.5
                                         — Share of joint ventures                                                              23        2,470.3          2,446.1     Asia Pacific                            Freehold                              Tanizawa SOGO Appraisal Co Ltd                                           23.1
 Investment properties under development — Group                                                                                19            61.0              3.6                                           Long leasehold                        Daiwa Real Estate Appraisal Co Ltd                                        15.1
                                         — Share of joint ventures                                                              23            87.2            119.0                                           Long leasehold                        Savills Valuation & Professional Services Limited                       48.6
 Trading properties                      — Group                                                                                27           138.7           142.3     Australia                              Freehold                              Jones Lang LaSalle, Chartered Surveyors                                233.7
                                         — Share of joint ventures                                                              23          206.8            203.4
 Other financial assets*                 — Group                                                                                24            31.1             32.0                                                                                                                                                      2,525.9

 Total property assets                                                                                                                    5,460.0          5,221.9     The historical cost of the Group’s investment properties was £1,184.2m (2009: £1,242.4m).
*Other financial assets included in property assets relate to equity and debt investments in property companies.                                                        At 31 December 2010, investment properties with a carrying amount of £1,306.8m were pledged as security for bank loans (2009: £1,110.8m).
                                                                                                                                                                       Included in the above are investment properties available for sale of £9.6m (2009: £124.2m).

                                                                                                                                                                       20 investment property under development
                                                                                                                                                                                                                                                                                               Freehold      Leasehold       Total
                                                                                                                                                                                                                                                                                                    £m             £m          £m

                                                                                                                                                                       At 1 January 2009                                                                                                          34.7             —        34.7
                                                                                                                                                                       Transfer to investment properties                                                                                         (34.7)            —       (34.7)
                                                                                                                                                                       At 31 December 2009 and 2010                                                                                                  —             —           —

                                                                                                                                                                       At 1 January 2009, investment properties under development of £34.7m were transferred to investment properties in accordance with the amendment
                                                                                                                                                                       to IAS 40 Investment Properties which was adopted in 2009.
Grosvenor Annual Report 2010                           Accounts Notes to the financial statements                                                         102       Grosvenor Annual Report 2010                               Accounts Notes to the financial statements                                                              103
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21 other property, plant and equipment                                                                                                                              22 investments in subsidiaries
2010                                                                                                                                                                Company

                                                                                                                         Computer    Fixtures, fittings                                                                                                                                                                                      Shares
                                                                                          Land and          Leasehold       and IT         and motor                                                                                                                                                                                        at cost
                                                                                          buildings     improvements    equipment            vehicles      Total                                                                                                                                                                                £m
                                                                                                £m                £m          £m                   £m        £m
                                                                                                                                                                    At 1 January 2010 and 31 December 2010                                                                                                                            1,358.4
Cost
At 1 January 2010                                                                            25.3               6.6           6.5                 8.9     47.3      At 31 December 2010, the Group had the following principal investments in subsidiaries:
Additions                                                                                      —                0.1           0.2                 0.1      0.4
Disposals                                                                                      —                 —           (1.3)               (0.1)    (1.4)     INTERMEDIATE HOLDINg COMpANIES                                                                               pROpERTy INvESTMENT
Revaluation gains                                                                             3.6                —             —                   —       3.6      Grosvenor Estate Holdings*¥                                                                                  Grosvenor West End Properties*
Exchange movements                                                                             —                0.1           0.1                 0.1      0.3      Grosvenor Limited                                                                                            Eaton Square Properties Limited¥
At 31 December 2010                                                                          28.9               6.8           5.5                 9.0     50.2      Grosvenor Americas Limited (Canada)                                                                          Grosvenor (Basingstoke) Limited
                                                                                                                                                                    Grosvenor Americas USA Inc. (USA)                                                                            Grosvenor Commercial Properties*
Depreciation
                                                                                                                                                                    Grosvenor International SA (Luxembourg)ø                                                                     Grosvenor Properties*
At 1 January 2010                                                                             (0.1)             (5.6)       (4.9)               (3.6)     (14.2)
                                                                                                                                                                    Grosvenor Continental Europe Holdings SA (Luxembourg)
Depreciation charge for the year                                                                —               (0.3)       (0.7)               (0.6)      (1.6)
                                                                                                                                                                    Grosvenor First European Property Investments SA (Luxembourg)†                                               Old Broad Street Properties Limited
Disposals                                                                                       —                 —          1.3                 0.1        1.4
                                                                                                                                                                    Grosvenor Asia Pacific Limited (Hong Kong)                                                                    Liverpool Property Investments Limited
Exchange movements                                                                              —               (0.1)         —                 (0.1)      (0.2)
                                                                                                                                                                    Grosvenor Australia Properties Pty Limited (Australia)                                                       Grosvenor Realty Investments Limited
At 31 December 2010                                                                           (0.1)            (6.0)        (4.3)               (4.2)     (14.6)    Grosvenor Australia Investments Pty Limited (Australia)                                                      Cambridge Retail Investments Limited
Carrying amount                                                                                                                                                     Grosvenor Fund Management Limited
At 1 January 2010                                                                            25.2                1.0          1.6                 5.3      33.1
                                                                                                                                                                    FINANCINg                                                                                                    pROpERTy DEvELOpMENT
At 31 December 2010                                                                          28.8               0.8           1.2                4.8      35.6      Grosvenor Group Finance Company*                                                                             Grosvenor Developments Limited
                                                                                                                                                                    Grosvenor UK Finance Plc                                                                                     Liverpool PSDA Limited
2009

                                                                                                                         Computer    Fixtures, fittings
                                                                                                                                                                                                                                                                                 FuND MANAgEMENT
                                                                                          Land and          Leasehold       and IT         and motor                                                                                                                             Grosvenor Investment Management Limited
                                                                                          buildings     improvements    equipment            vehicles      Total                                                                                                                 Grosvenor Investment Management US Inc. (USA)
                                                                                                £m                £m          £m                    £m       £m
                                                                                                                                                                    *Unlimited company
Cost
                                                                                                                                                                    ¥100% of preference shares are also owned
At 1 January 2009                                                                            26.5                6.7         6.4                 6.2      45.8
Additions                                                                                       —                0.1         0.4                 0.9        1.4     øOrdinary and non–voting preference shares are wholly owned. All of the floating rate guaranteed class B voting preferred redeemable shares, which carry approximately

Disposals                                                                                       —                 —         (0.3)               (0.9)      (1.2)    36% of the total voting rights, are publicly held.
Revaluation losses                                                                            (1.2)               —            —                  —        (1.2)    †77.5% owned
Transfer from investment property                                                               —                 —            —                 2.9        2.9
Exchange movements                                                                              —               (0.2)          —                (0.2)     (0.4)     All the above companies except Grosvenor Estate Holdings are indirectly owned. All companies are wholly owned and incorporated in Great Britain
                                                                                                                                                                    except where indicated. Except as disclosed above, all interests are in the form of ordinary shares.
At 31 December 2009                                                                          25.3               6.6          6.5                  8.9      47.3
                                                                                                                                                                    The above represents the Group’s material subsidiary undertakings. A full list of all subsidiary undertakings is available on request.
Depreciation
At 1 January 2009                                                                             (0.1)             (5.4)       (4.3)               (3.2)     (13.0)
Depreciation charge for the year                                                                —               (0.3)       (0.8)               (0.6)       (1.7)
Disposals                                                                                       —                  —         0.2                 0.1        0.3
Exchange movements                                                                              —                0.1          —                  0.1        0.2
At 31 December 2009                                                                           (0.1)             (5.6)        (4.9)              (3.6)     (14.2)
Carrying amount
At 1 January 2009                                                                            26.4                1.3          2.1                3.0       32.8
At 31 December 2009                                                                          25.2                1.0          1.6                 5.3      33.1

Land and buildings are freehold and were valued at 31 December 2010 by independent valuers DTZ Debenham Tie Leung, Chartered Surveyors,
on the basis of market value for existing use in accordance with the Appraisal and Valuation Manual of the Royal Institution of Chartered Surveyors.
The historical cost of the Group’s revalued land and buildings above at 31 December 2010 was £13.6m (2009: £13.6m).
The carrying value of freehold land and buildings includes capitalised interest of £nil (2009: £nil).
At 31 December 2010, land and buildings with a carrying value of £28.3m were pledged as security for bank loans (2009: £24.6m).
Grosvenor Annual Report 2010                      Accounts Notes to the financial statements                                       104        Grosvenor Annual Report 2010                          Accounts Notes to the financial statements                                       105
www.grosvenor.com                                                                                                                             www.grosvenor.com




23 investments in joint ventures                                                                                                              23 investments in joint ventures continued
2010                                                                                                                                          2009

                                      Britain &                 Continental       Asia                        Fund          Not                                                         Britain &                 Continental       Asia                        Fund          Not
                                       Ireland      Americas        Europe      Pacific     Australia    Management    allocated       Total                                              Ireland      Americas        Europe      Pacific     Australia    Management    allocated       Total
                                            £m           £m             £m         £m           £m              £m          £m          £m                                                    £m           £m             £m         £m           £m              £m          £m          £m

Share of profit/(loss)                                                                                                                         Share of (loss)/profit
  from joint ventures                                                                                                                           from joint ventures
Gross rental income                     32.4           19.6         107.3        8.0             1.8           0.1          —       169.2     Gross rental income                         33.8           18.4         125.5         5.5            1.5           0.2          —       184.9
Property outgoings                       (7.3)         (6.7)        (25.6)      (3.0)             —           (0.1)         —       (42.7)    Property outgoings                           (7.0)         (6.4)        (21.3)       (3.1)            —           (0.1)         —        (37.9)
Net rental income                        25.1          12.9          81.7        5.0             1.8           —            —       126.5     Net rental income                           26.8           12.0        104.2          2.4            1.5          0.1           —       147.0
Fees and other income                      —             —           18.4          —              —           0.2           —        18.6     Fees and other income                        0.4              —         18.6            —             —          (0.2)          —        18.8
Profit/(loss) on trading and                                                                                                                   (Loss)/profit on trading and
  development properties                  0.3             —          (13.9)     14.6            0.9             —           —          1.9       development properties                    (1.7)           —          (12.3)        4.6           (1.3)           —          —         (10.7)
Administrative expenses                  (3.3)          (1.7)       (25.2)       (1.7)           —              —         (5.1)      (37.0)   Administrative expenses                      (7.3)         (1.8)       (32.0)        (2.6)         (0.1)            —         4.5        (39.3)
Net financing costs                      (14.9)         (4.5)        (28.6)       (2.7)         (0.6)            —           —        (51.3)   Net financing costs                         (14.6)          (3.6)       (40.9)        (2.3)         (0.4)          (0.1)        —         (61.9)
Revenue profit/(loss)                       7.2          6.7          32.4       15.2             2.1          0.2         (5.1)      58.7     Revenue profit/(loss)                          3.6           6.6          37.6         2.1          (0.3)         (0.2)        4.5        53.9
Net gains/(losses) on revaluation                                                                                                             Net (losses)/gains on revaluation
  and sale of investment properties     62.2           16.4          20.3         1.3            1.1          (0.1)         —       101.2       and sale of investment properties        (39.6)        (50.6)        (142.7)      15.0            (1.8)        (0.6)          —      (220.3)
Derivative fair value adjustments        (1.7)          0.7             —          —              —             —           —        (1.0)    Derivative fair value adjustments           (0.4)          0.5              —          —              —            —            —          0.1
Net losses on other investments          0.2             —           (0.4)       (1.7)            —             —           —        (1.9)    Net gains/(losses) on other investments      2.6            —            (3.0)         —              —            —            —        (0.4)
                                                                                                                                              Impairment of goodwill                        —             —             (1.2)        —              —            —            —         (1.2)
profit/(loss) before tax                  67.9         23.8           52.3       14.8            3.2           0.1         (5.1)     157.0
Current tax                                —          (0.2)           (9.7)      (2.2)         (0.3)           —            —        (12.4)   (Loss)/profit before tax                    (33.8)        (43.5)       (109.3)        17.1           (2.1)        (0.8)        4.5       (167.9)
Deferred tax                               —            —           (23.6)       (0.1)         (0.3)           —            —       (24.0)    Current tax                                   —           (0.2)         (8.5)        (1.5)         (0.2)           —           —         (10.4)
Non-controlling interest                   —            —           (16.9)         —             —             —            —        (16.9)   Deferred tax                                  —             —           29.7         (7.8)            —            —           —          21.9
                                                                                                                                              Non-controlling interest                      —             —           21.8         0.2              —            —           —          22.0
                                         67.9         23.6             2.1      12.5            2.6           0.1         (5.1)     103.7
                                                                                                                                                                                         (33.8)         (43.7)       (66.3)        8.0           (2.3)         (0.8)        4.5      (134.4)
Share of assets and liabilities
Non–current assets                                                                                                                            Share of assets and liabilities
— investment properties               464.8           217.0      1,468.2       290.0           25.9           4.4           —     2,470.3     Non–current assets
— investment properties                                                                                                                       — investment properties                   468.6          194.0       1,581.4       176.8           21.1           4.2           —     2,446.1
     under development                     —             —           87.2          —              —             —           —        87.2     — investment properties
— other                                   0.2            —           64.7          —              —             —           —        64.9          under development                        2.4            —          116.6          —              —             —           —        119.0
Current assets                                                                                                                                — other                                         —            —           58.0          —              —             —           —         58.0
— cash                                  31.4            2.0          34.3        23.9            0.3          0.8          —          92.7    Current assets
— trading properties                   175.2            6.7            —          19.1           5.8           —           —        206.8     — cash                                      15.3            1.9          51.7         8.9            1.5          0.8           —          80.1
— other                                   5.6           1.4          74.3        19.2            0.1          0.1          —         100.7    — trading properties                       107.5              —          57.4        34.9            3.6           —            —        203.4
Non–current liabilities                (117.2)        (71.5)     (1,181.6)     (147.3)         (12.0)        (2.4)         —      (1,532.0)   — other                                      8.9            1.5          88.1        33.2            0.1           —            —         131.8
Current liabilities                   (292.3)         (13.6)       (118.1)      (44.2)          (0.5)        (0.9)        2.3       (467.3)   Non–current liabilities                    (68.8)         (69.9)    (1,366.3)      (131.9)         (11.0)        (2.6)          —     (1,650.5)
                                                                                                                                              Current liabilities                       (358.6)          (4.0)       (139.9)      (73.7)          (0.4)        (0.6)         7.4      (569.8)
Net assets                             267.7         142.0         429.0       160.7           19.6           2.0         2.3     1,023.3
Goodwill                                  —              —          40.0          —              —              —          —         40.0     Net assets                                 175.3         123.5         447.0        48.2           14.9           1.8          7.4      818.1
                                                                                                                                              Goodwill                                      —             —           41.5          —              —             —            —        41.5
                                       267.7         142.0         469.0       160.7           19.6           2.0         2.3     1,063.3
                                                                                                                                                                                         175.3         123.5         488.5        48.2           14.9           1.8          7.4      859.6
Borrowings included in liabilities    (352.6)         (81.8)       (782.1)    (144.5)           (7.8)         (2.2)         —     (1,371.0)
                                                                                                                                              Borrowings included in liabilities        (373.8)         (70.1)    (1,004.8)      (113.1)          (7.8)         (2.6)         —     (1,572.2)
 Grosvenor Annual Report 2010                                Accounts Notes to the financial statements                                                              106          Grosvenor Annual Report 2010                          Accounts Notes to the financial statements                                                   107
 www.grosvenor.com                                                                                                                                                                www.grosvenor.com




 23 investments in joint ventures continued                                                                                                                                       24 other financial assets
 At 31 December 2010, the Group had the following principal interests in joint ventures which are accounted for on the basis explained in Note 1:                                                                                                                                                                        2010           2009
                                                                                                                                                                                                                                                                                                                          £m              £m
                                                                                                                                                                  Group share
                                                                                                                                Country of          Effective     of net assets   Non–current assets
                                                       Principal activities                                      incorporation/registration          interest               £m    Equity shares                                                                                                                         26.6           23.5
 Britain & Ireland                                                                                                                                                                Finance lease receivables                                                                                                              6.9            6.9
 Grosvenor Shopping Centre Fund                        Property investment                                      England and Wales                   23.4%                 59.0    Mezzanine loans                                                                                                                        4.0            3.4
 Grosvenor London Office Fund                           Property investment                                      England and Wales                   24.2%                 69.7    Other financial assets                                                                                                                 5.1            4.9
 Grosvenor Festival Place Fund                         Property investment                                      England and Wales                   41.0%                 32.2                                                                                                                                          42.6           38.7
 Grosvenor Residential Investment Fund                 Property investment                                      England and Wales                   29.4%                 11.5
 Grosvenor Liverpool Fund                              Property investment                                      England and Wales                   19.6%                 61.6    Current assets
 GC Bankside LLP                                       Property development                                     England and Wales                    50%                   7.0    Mezzanine loans                                                                                                                         0.5            5.2
 GC Campden Hill LLP                                   Property development                                     England and Wales                    50%                   8.3
 Barkhill Limited                                      Property development                                     Republic of Ireland                  50%                   9.8    Included in the above are property related financial assets of £31.1m (2009: £32.0m).
 The Grouss Residential Investment Partnership         Property development                                               Scotland                  31.8%                  9.9    Principal financial assets at 31 December 2010:
 Americas                                                                                                                                                                         Equity shares
 Joint ventures with BBCAF Inc                         Property investment                               United States of America               50%/25%                113.2
 Joint ventures with the Getty Family Trust            Property investment                               United States of America                   50%                  4.8                                                                                                                                         Country of      Effective
 GEMOA Inc                                             Property investment                               United States of America                   20%                 10.6                                                                     Principal activities                                             incorporation       interest
 Art Hill Management                                   Property investment                               United States of America                 48.9%                  7.3      Asia Standard International Group Limited                      Property investment and development                             Hong Kong            4.1%
 Joint ventures with Rockwood                          Property investment                               United States of America                   33%                  1.3                                                                       (listed on the Hong Kong Stock Exchange)
 Joint ventures with JBC Companies                     Property development                              United States of America                   50%                  4.8      ISPT Grosvenor International Property Trust                    Property investment vehicle                                       Australia          9.9%
 Continental Europe*                                                                                                                                                              Shmael U.S. Real Estate Fund                                   Property investment vehicle                                           USA           10.0%
 Sonae Sierra SGPS SA                                  Property investment and development                                    Portugal                50%             468.6
                                                                                                                                                                                  Finance lease receivables
 Asia pacific
 Grosvenor Vega China Retail Fund                      Property investment                                                   China                   7.0%                5.7                                                                                                                                             2010           2009
 Belgravia Place                                       Property investment                                                   China                   50%                 0.2                                                                                                                                              £m              £m
 Joint ventures with Seatonmere Limited                Property investment                                              Hong Kong                    50%               114.9      Finance lease receivable                                                                                                                5.5            5.5
 Westminster Terrace                                   Property development                                             Hong Kong                    50%                 2.9      Unguaranteed residual value                                                                                                             1.4            1.4
 Grosvenor Park Partners                               Property development                                         Cayman Islands                   50%                10.7
 Stable Residential Fund                               Property investment                                                   Japan                     4%                1.2                                                                                                                                              6.9            6.9
 Grosvenor Capital Advisors Partnership Fund           Property investment                                                   Japan            33.7%/18.8%               14.6
 Grosvenor Office Retail Fund                           Property investment                                                   Japan                   7.6%                4.5      Finance lease receivables in respect of rents on leasehold properties are receivable as follows:
 Joint ventures with Tokutei Mokutei Kaish             Property investment                                                   Japan                   50%                 5.3
                                                                                                                                                                                                                                                                                                      Minimum        Unearned
 Australia                                                                                                                                                                                                                                                                                      lease payments   finance income       Principal
                                                                                                                                                                                                                                                                                                           £m               £m             £m
 Fieldglen II                                          Property investment                                                    Australia               50%                 13.7
 Hassall Street Trust                                  Property development                                                   Australia               50%                  5.9    Less than one year                                                                                                     0.7             0.7              —
                                                                                                                                                                                  Between one and five years                                                                                              2.8             2.8              —
*The investments in joint ventures in Continental Europe are controlled by Grosvenor First European Property Investments SA (GFEPI), which is 77.5% owned by the Group.           More than five years                                                                                                   93.5            88.0             5.5
 The effective interest above includes the interests of the non-controlling investors in GFEPI.
                                                                                                                                                                                                                                                                                                        97.0             91.5            5.5
 The financial statements include, on an equity accounted basis, the results and financial position of the Group’s interests in UK limited partnerships.
 Accordingly advantage has been taken of the exemptions provided by Regulation 7 of the Partnerships and Unlimited Companies (Accounts) Regulations
 1992 as amended by SI 2005 No. 1987 The Partnerships and Unlimited Companies (Accounts) (Amendment) Regulations 2005, which dispenses with the                                   MEzzANINE LOANS
 requirement for those partnerships to file accounts with Companies House.                                                                                                         Mezzanine loans are loans provided to residential developers in the USA and Canada. A return is earned comprising fixed rate interest and a share
                                                                                                                                                                                  of the profits on completion of the development.
Grosvenor Annual Report 2010   Accounts Notes to the financial statements                           108      Grosvenor Annual Report 2010                            Accounts Notes to the financial statements                                                   109
www.grosvenor.com                                                                                            www.grosvenor.com




25 intangible assets                                                                                         26 Deferred tax assets and liabilities
2010
                                                                                                             RECOgNISED DEFERRED TAx ASSETS AND LIABILITIES
                                                                                           Other             Deferred tax assets and liabilities are attributable to the following items:
                                                                                       intangible
                                                                            Goodwill       assets   Total                                                                                            2010                                       2009
                                                                                £m            £m      £m
                                                                                                                                                                                            Assets   Liabilities         Net         Assets     Liabilities           Net
Cost                                                                                                                                                                                           £m            £m          £m             £m              £m            £m

At 1 January 2010                                                              9.2          2.6     11.8     Investment property — contingent gains                                         22.3      (499.1)       (476.8)          19.3        (412.1)          (392.8)
Disposals                                                                       —          (1.0)    (1.0)    Investment property — deferred gains                                           44.9           —          44.9           42.8             —             42.8
Exchange movements                                                            (0.3)         0.1     (0.2)    Other property, plant and equipment                                             0.2       (12.0)         (11.8)          0.2         (12.5)            (12.3)
At 31 December 2010                                                            8.9           1.7    10.6     Other financial assets                                                          2.6        (0.6)           2.0           3.0          (1.0)              2.0
                                                                                                             Interest–bearing loans and borrowings                                           3.7         (1.2)          2.5           2.9             —               2.9
Amortisation/impairment                                                                                      Employee benefits                                                              15.3        (3.5)          11.8          15.0          (3.1)             11.9
At 1 January 2010                                                             (4.2)        (2.6)    (6.8)    Provisions                                                                      0.3           —            0.3           1.2             —               1.2
Disposals                                                                       —           1.0      1.0     Other items                                                                     6.3         (5.7)          0.6           2.4          (2.8)             (0.4)
Exchange movements                                                             0.2         (0.1)     0.1     Tax value and loss carry–forwards recognised                                    8.3           —            8.3           8.5             —               8.5
At 31 December 2010                                                           (4.0)         (1.7)   (5.7)    Tax assets/(liabilities)                                                       103.9     (522.1)       (418.2)           95.3       (431.5)          (336.2)
Carrying amount
At 1 January 2010                                                              5.0            —      5.0     At 31 December 2010, no deferred tax was provided in respect of unremitted earnings of overseas subsidiaries because the Group is able to control the
                                                                                                             timing of the reversal of temporary differences and is satisfied that it is probable they will not reverse in the foreseeable future. At 31 December 2010
At 31 December 2010                                                            4.9            —      4.9
                                                                                                             the total of these temporary differences was £434.9m (2009: £418.0m) and the potential tax effect £21.7m (2009: £26.3m). The temporary differences
                                                                                                             at 31 December 2010 represent only the unremitted earnings of those overseas subsidiaries where remittance of those earnings would still result in a tax
2009                                                                                                         liability, principally as a result of dividend withholding taxes levied by the overseas tax jurisdictions in which these subsidiaries operate.
                                                                                           Other             unrecognised deferred tax assets
                                                                                       intangible
                                                                            Goodwill       assets    Total                                                                                                                                          2010             2009
                                                                                £m            £m       £m
                                                                                                                                                                                                                                                     £m                £m
Cost                                                                                                         Tax losses                                                                                                                            30.5             29.6
At 1 January 2009                                                             10.0          2.9     12.9
Exchange movements                                                            (0.8)        (0.3)     (1.1)
                                                                                                             Movement in temporary differences during the year
At 31 December 2009                                                             9.2         2.6     11.8
                                                                                                                                                                                                     Balance at                                                 Balance at
Amortisation/impairment                                                                                                                                                                               1 January    Recognised    Recognised     Exchange      31 December
At 1 January 2009                                                             (4.5)        (2.3)    (6.8)                                                                                                  2010     in income      in equity   movement              2010
                                                                                                                                                                                                            £m             £m           £m           £m               £m
Amortisation                                                                    —          (0.6)    (0.6)
Exchange movements                                                             0.3          0.3      0.6     Investment property — contingent gains                                                   (392.8)          (77.7)         (0.9)         (5.4)        (476.8)
                                                                                                             Investment property — deferred gains                                                       42.8              2.1           —              —           44.9
At 31 December 2009                                                           (4.2)        (2.6)    (6.8)
                                                                                                             Other property, plant and equipment                                                        (12.3)           0.6            —           (0.1)          (11.8)
Carrying amount                                                                                              Other financial assets                                                                       2.0             0.1         (0.1)            —             2.0
At 1 January 2009                                                               5.5         0.6      6.1     Interest–bearing loans and borrowings                                                        2.9           (0.3)           —           (0.1)            2.5
At 31 December 2009                                                            5.0            —      5.0     Employee benefits                                                                           11.9           (0.4)          0.1           0.2            11.8
                                                                                                             Provisions                                                                                   1.2           (1.0)           —            0.1             0.3
                                                                                                             Other items                                                                                 (0.4)            1.7           —           (0.7)            0.6
                                                                                                             Tax value and loss carry–forwards recognised                                                 8.5            (1.6)          —            1.4             8.3
                                                                                                                                                                                                      (336.2)         (76.5)          (0.9)         (4.6)        (418.2)


                                                                                                             27 trading properties
                                                                                                                                                                                                                                                    2010             2009
                                                                                                                                                                                                                                                     £m                £m

                                                                                                             At 1 January                                                                                                                        142.3             164.2
                                                                                                             Additions                                                                                                                            21.8             151.6
                                                                                                             Capitalised interest                                                                                                                    —               3.3
                                                                                                             Disposals                                                                                                                           (29.3)            (95.9)
                                                                                                             Provision for impairment                                                                                                             (2.0)             (0.6)
                                                                                                             Reversal of provision for impairment                                                                                                  3.4               1.8
                                                                                                             Transfer from/(to) investment properties                                                                                              2.8             (83.8)
                                                                                                             Exchange movements                                                                                                                   (0.3)              1.7
                                                                                                             At 31 December                                                                                                                       138.7            142.3

                                                                                                             At 31 December 2010, trading properties with a carrying amount of £51.2m were pledged as security for bank loans (2009: £68.4m).
Grosvenor Annual Report 2010                        Accounts Notes to the financial statements                                                         110         Grosvenor Annual Report 2010                         Accounts Notes to the financial statements                                                      111
www.grosvenor.com                                                                                                                                                  www.grosvenor.com




28 trade and other receivables                                                                                                                                     31 financial instruments
                                                                                                                 Group                       Company
                                                                                                                                                                   CApITAL RISk MANAgEMENT
                                                                                                        2010                 2009       2010              2009     The capital structure of the Group comprises debt, which includes the borrowings disclosed in Note 30; cash and cash equivalents disclosed in Note 29;
                                                                                                         £m                    £m        £m                 £m
                                                                                                                                                                   and equity, comprising issued share capital, reserves and retained earnings as disclosed in Notes 37 and 38.
Trade receivables                                                                                      16.7                 21.2        —                  —
Receivables due from subsidiaries                                                                         —                    —     200.3             304.4       The Group manages its capital to optimise the allocation of equity between the Operating Companies and to enable them to meet their short, medium
Receivables due from joint ventures                                                                    70.2                112.4        —                  —       and long–term targets. Internal gearing and interest cover limits are set for the Group and each Operating Company. Group gearing at the year end
Other receivables                                                                                      56.7                 16.9        —                  —       is 17.7% (2009: 11.3%).
Prepayments                                                                                             9.4                 12.2        —                  —       Categories of financial instruments and their fair values
Accrued income                                                                                          3.9                  2.8        —                  —
                                                                                                                                                                   2010
                                                                                                      156.9                165.5     200.3             304.4
                                                                                                                                                                                                                                                                                               Financial        Total
                                                                                                                                                                                                                                         Loans and        Held for   Available–for–sale        assets at     carrying      Fair
Included in the above are receivables due after more than one year totalling £0.2m (2009: £46.1m).                                                                                                                                      receivables        trading           securities   amortised cost      amount      value
                                                                                                                                                                                                                                                £m             £m                   £m               £m           £m        £m

29 cash and cash equivalents                                                                                                                                       Financial assets:
                                                                                                                                                                   Equity shares                                                                —             —                 26.6                 —        26.6       26.6
                                                                                                                                        2010              2009
                                                                                                                                         £m                 £m     Finance lease receivable                                                   6.9             —                   —                  —         6.9        9.7
                                                                                                                                                                   Mezzanine loan investments                                                 4.0            0.5                  —                  —         4.5        4.5
Bank balances                                                                                                                         114.8             117.5      Other financial assets                                                        —             —                  5.1                 —         5.1        5.1
Cash deposits                                                                                                                         154.6             387.7      Trade and other receivables                                               70.2             —                   —               73.4       143.6      143.6
Cash and cash equivalents                                                                                                            269.4             505.2       Cash and cash equivalents                                                    —             —                   —              269.4       269.4      269.4
Bank overdrafts                                                                                                                        (0.1)              —        Total financial assets                                                     81.1            0.5                 31.7            342.8        456.1     458.9
Cash and cash equivalents in the statement of cash flows                                                                              269.3            505.2

The amount of cash and cash equivalents not available for use by the Group totals £32.1m (2009: £42.4m), of which £20.5m (2009: £nil) has been pledged                                                                                                                                         Financial        Total
as collateral.                                                                                                                                                                                                                                                                              liabilities at   carrying      Fair
                                                                                                                                                                                                                                                                                          amortised cost      amount      value
                                                                                                                                                                                                                                                                                                      £m          £m        £m
30 interest–bearing loans and borrowings                                                                                                                           Financial liabilities:
                                                                                                                                        2010              2009     Overdraft                                                                                                                        (0.1)      (0.1)      (0.1)
                                                                                                                                         £m                 £m     Fixed rate loans
Non–current liabilities:                                                                                                                                              Sterling secured mortgage 2034                                                                                             (50.0)       (50.0)     (65.7)
Secured bank loans                                                                                                                   263.4             310.8          Sterling secured bond 2026                                                                                                (202.2)      (202.2)    (188.5)
Unsecured bank loans                                                                                                                  62.9              112.8         Sterling unsecured bond 2019                                                                                                (52.5)       (52.5)     (55.5)
Secured bond issues                                                                                                                  202.2             202.3          Sterling fixed rate                                                                                                           (0.7)        (0.7)      (0.7)
Unsecured bond issues                                                                                                                 52.6               52.6         US Dollars                                                                                                                 (32.4)       (32.4)     (34.0)
Finance lease liabilities                                                                                                              1.4                1.4         Canadian Dollars                                                                                                           (39.8)       (39.8)      (41.9)
Loan from joint ventures                                                                                                               0.9               12.5      Total fixed rate loans                                                                                                         (377.6)     (377.6)    (386.3)
Preference shares                                                                                                                     30.4               31.4
                                                                                                                                                                   Floating rate loans
                                                                                                                                      613.8             723.8         Sterling                                                                                                                    (59.0)      (59.0)     (59.0)
Current liabilities:                                                                                                                                                  US Dollars                                                                                                                  (92.4)      (92.4)     (92.4)
Current portion of secured bank loans                                                                                                  63.7              53.0         Canadian Dollars                                                                                                               (1.9)      (1.9)      (1.9)
Current portion of unsecured bank loans                                                                                                59.8                  —        Euros                                                                                                                       (69.4)      (69.4)     (69.4)
Current portion of currency swaps                                                                                                       1.3               (1.4)       Hong Kong Dollars                                                                                                            (18.1)      (18.1)     (18.1)
                                                                                                                                                                      Japanese Yen                                                                                                                 (12.3)      (12.3)     (12.3)
                                                                                                                                      124.8               51.6        Australian Dollars                                                                                                          (55.9)      (55.9)     (55.9)

The bank loans and secured bonds are secured over investment properties with a carrying value of £1,306.8m (2009: £1,110.8m), land and buildings with              Total floating rate loans                                                                                                     (309.0)      (309.0)    (309.0)
a carrying value of £28.3m (2009: £24.6m) and trading properties with a carrying value of £51.2m (2009: £68.4m). Included in secured bond issues is £2.4m          Finance lease liabilities                                                                                                        (1.4)      (1.4)      (1.4)
(2009: £2.4m) of net un–amortised premium. The preference shares are issued by a subsidiary undertaking (see Note 22).
                                                                                                                                                                   Loans from joint ventures                                                                                                        (0.9)      (0.9)      (0.9)
FINANCE LEASE LIABILITIES                                                                                                                                          Preference shares                                                                                                              (30.4)      (30.4)     (30.4)
Finance lease liabilities are payable as follows:                                                                                                                  Trade and other payables                                                                                                       (65.0)      (65.0)     (65.0)
                                                                                     2010                                            2009                          Total financial liabilities                                                                                                   (784.4)      (784.4)    (793.1)
                                                                     Minimum                                             Minimum
                                                                         lease                                               lease
                                                                     payments         Interest       principal           payments     Interest         Principal
                                                                           £m              £m              £m                  £m          £m                £m

Less than one year                                                       0.3             0.3               —                 0.3        0.3                  —
Between one and five years                                               1.2             1.2               —                 1.2        1.2                  —
More than five years                                                    73.1            71.7             1.4                74.4       73.0                1.4
                                                                        74.6            73.2             1.4                75.9       74.5                1.4
Grosvenor Annual Report 2010                                Accounts Notes to the financial statements                                                    112      Grosvenor Annual Report 2010        Accounts Notes to the financial statements                                                 113
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31 financial instruments continued                                                                                                                                 31 financial instruments continued
2010                                                                                                                                                               2009

                                                                                                                                                  Total                                                                                                                  Financial        Total
                                                                                                                             Held for          carrying    Fair                                                       Loans and     Held for   Available–for–sale        assets at     carrying      Fair
                                                                                                                              trading           amount    value                                                      receivables     trading           securities   amortised cost     amount       value
                                                                                                                                  £m                £m      £m                                                               £m          £m                   £m               £m           £m        £m

Derivatives                                                                                                                                                        Financial assets:
Interest rate swaps                                                                                                                                                Equity shares                                             —          —                  23.5               —         23.5       23.5
   US Dollars                                                                                                                  (3.8)             (3.8)    (3.8)    Finance lease receivable                                6.9          —                    —                —          6.9       10.9
   Euros                                                                                                                       (1.0)             (1.0)    (1.0)    Mezzanine loan investments                              6.8         1.8                   —                —          8.6        8.6
   Japanese Yen                                                                                                                (0.1)             (0.1)    (0.1)    Other financial assets                                     —          —                   4.8              0.1         4.9        4.9
   Chinese Renminbi                                                                                                             (1.9)            (1.9)    (1.9)    Trade and other receivables                           112.4          —                    —              38.1       150.5      150.5
   Australian Dollars                                                                                                           0.2               0.2      0.2     Cash and cash equivalents                                 —          —                    —             505.2       505.2      505.2
Total interest rate swaps                                                                                                      (6.6)             (6.6)    (6.6)    Total financial assets                                 126.1         1.8                28.3             543.4       699.6      703.6
Currency swaps
  Sterling                                                                                                                     (8.4)             (8.4)    (8.4)
  Chinese Renminbi                                                                                                             (4.3)             (4.3)    (4.3)                                                                                                          Financial        Total
                                                                                                                                                                                                                                                                      liabilities at   carrying      Fair
Total currency swaps                                                                                                          (12.7)            (12.7)    (12.7)                                                                                                    amortised cost      amount      value
                                                                                                                                                                                                                                                                                £m          £m        £m
Total derivatives                                                                                                             (19.3)            (19.3)    (19.3)   Financial liabilities:
                                                                                                                                                                   Fixed rate loans
The table below provides an analysis of financial instruments that are measured at fair value subsequent to initial recognition, grouped according to the
                                                                                                                                                                      Sterling secured mortgage 2034                                                                       (50.0)       (50.0)      (68.7)
degree to which the fair value is derived from observable data.
                                                                                                                                                                      Sterling secured bond 2026                                                                          (202.3)      (202.3)    (190.0)
                                                                                                                                        2010                          Sterling unsecured bond 2019                                                                          (52.5)       (52.5)     (55.5)
                                                                                                                   Level 1   Level 2            Level 3    Total      US Dollars                                                                                            (31.4)       (31.4)     (31.6)
                                                                                                                      £m        £m                 £m        £m       Canadian Dollars                                                                                      (37.4)       (37.4)     (37.4)
Available for sale financial assets                                                                                                                                 Total fixed rate loans                                                                                  (373.6)      (373.6)    (383.2)
Equity shares                                                                                                        6.2      20.4                  —     26.6
                                                                                                                                                                   Floating rate loans
Other                                                                                                                5.1         —                  —      5.1
                                                                                                                                                                      Sterling                                                                                            (104.7)      (104.7)    (104.7)
Financial assets held for trading
                                                                                                                                                                      US Dollars                                                                                            (85.1)       (85.1)     (85.1)
Mezzanine loan investments                                                                                             —         —                0.5      0.5
                                                                                                                                                                      Euros                                                                                                (80.3)       (80.3)     (80.3)
Derivatives                                                                                                            —        0.2                —       0.2
                                                                                                                                                                      Japanese Yen                                                                                          (10.3)       (10.3)     (10.3)
Total financial assets                                                                                               11.3      20.6                0.5     32.4        Australian Dollars                                                                                   (65.5)       (65.5)     (65.5)
Financial liabilities held for trading                                                                                                                             Total floating rate loans                                                                               (345.9)      (345.9)    (345.9)
Derivatives                                                                                                            —     (19.5)                 —     (19.5)
                                                                                                                                                                   Finance lease liabilities                                                                                  (1.4)       (1.4)      (1.4)
Total financial lia