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Grosvenor and The Hongkong and Shanghai Hotels have completed an agreement to restructure their joint venture to deliver The Peninsula London hotel and homes at 1-5 Grosvenor Place, Hyde Park Corner, Belgravia in central London.

Under the agreement, HSH will pay Grosvenor £107.5 million in cash to acquire Grosvenor’s 50% economic interest in the project. HSH will assume control of delivering the redevelopment of the hotel and residential apartments, ensuring the highest levels of quality consistent with its ten highly acclaimed Peninsula Hotels around the world. HSH will be entitled to 100% of the proceeds from the future sales of the residential units and the profits of the hotel.

Grosvenor will retain the freehold of the property as part of its 300 acre London estate and receive a fixed base rent (subject to an agreed adjustment mechanism) from the hotel together with a turnover element. Grosvenor will reinvest the proceeds into its development pipeline.

The scheme received planning consent from Westminster City Council in April 2016. It includes plans to replace the existing 1950s and 1960s offices with a 189-room hotel and 24-28 residential apartments. Heads of terms for the restructured agreement were announced by the partners in July this year.

Commenting on the announcement, HSH Managing Director and Chief Executive Officer Mr Clement K.M. Kwok said: “This is a significant transaction for our group, given the importance of London as a business and tourism destination, reflecting our long-term philosophy and our optimism for the UK market. We are pleased to have worked with Grosvenor and our consultants to achieve planning for this project. As an owner-operator, we are experienced in delivering exceptionally high quality assets that become legends in their time. The Peninsula brand enjoys recognition as one of the leading luxury city hotel brands in the world and we believe The Peninsula London and residences will set new standards in luxury and service when the project is completed. We also place great importance on embracing and contributing to the local communities where we operate our hotels and properties. The Peninsula London will be rich in references to local architecture, artwork and ambience and we look forward to becoming an integral part of the local community.”

Peter Vernon, Chief Executive at Grosvenor Britain & Ireland said: “The Peninsula London will be an economic boost to the West End and to London’s standing as a global tourist destination. The building brings high-quality design to a prominent area of London, acting as a gateway to Belgravia. As freeholder, we look forward to continuing to work with The Hongkong and Shanghai Hotels, Limited to bring this great new development to our London estate. We will reinvest the proceeds from this deal into our development pipeline.”

HSH aims to start construction in summer 2017. Research by economic consultancy Volterra suggests the scheme will support over 2,000 jobs and deliver up to £60m to the London economy annually.

Source: Grosvenor

Ashwell Rogers, acting on behalf of Derwent London, have carried out a further two letting transactions at 4 Grosvenor Place over the last couple of months. Both floors were under offer with surrenders agreed with the previous tenant within four weeks of first coming to the market.

Both floors were let at rents exceeding the quoted terms and higher than the previously achieved rental levels. This is despite the eroding lease term on the building.

Both floors provided great natural light and were fitted out to a high standard. The 6th floor in particular provides some of the finest views in London over looking Buckingham Palace Gardens and Hyde Park Corner.

The reception and common parts in both 1 and 4 Grosvenor Place have recently been refurbished and there are a number of car parking spaces available.

Source: www.ashwellrogers.co.uk

Grosvenor and Derwent London announce that, following signature of their Memorandum of Understanding in October 2011, they have restructured their leases and established a joint venture to work towards the redevelopment of 1-5 Grosvenor Place, London SW1. The existing properties occupy a site of over 1.5 acres, at Hyde Park Corner, which offers the opportunity to undertake a substantial mixed-use redevelopment, to include a luxury hotel, office and residential uses.

Architects are in the process of being selected.
The existing buildings comprise mainly offices and extend to 168,000 sq ft (15,600m²), with the potential to increase the floor area significantly upon redevelopment. They are currently fully occupied with lease breaks in 2014 and 2016, at a gross income of £6.2m per annum.

Under the agreement Derwent London’s leases, which were due to expire in 2063 and 2084, have been restructured into a new 150-year term at a ground rent of 5% of rental income. Grosvenor hold the freehold. Simultaneously Derwent London has sold 50% of its ownership to Grosvenor and received £60m.

John Burns, Chief Executive at Derwent London, commented:
"We are delighted to have formalised our joint venture with Grosvenor. Having assembled the ownership of this site over many years, this initiative unlocks the opportunity for a substantial redevelopment in one of the best locations in the West End. We look forward to working with the Grosvenor team, with their vast experience in the area."

Giles Clarke, Grosvenor Britain & Ireland’s Executive Director with responsibility for its London estate, said:
“Signing this deal with Derwent London means we can now start working up detailed plans for this important site. This is one of the most exciting development opportunities currently available in prime central London.”

Derwent London will continue its asset management role at the site with Grosvenor managing the development