Norway’s oil fund has placed a £306mn bet on Mayfair assets

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Grosvenor, the Westminster property company, has sold a £306 million stake in London’s historic Mayfair estate to a Norwegian oil fund, with the landlord looking to reinvest it into development and lending.

A $1.7tn Norwegian sovereign wealth fund will take a 25 per cent stake in a new £1.2bn joint venture, adding to its big bet on the fortunes of London’s West End.

Grosvenor It will continue to oversee and manage a portfolio of 175 buildings across Mount Street and Grosvenor Street, including the Connaught Hotel.

The deal is the largest sale to foreign investors of the Mayfair estate, built by the Grosvenor family since the 1720s.

James Raynor, chief executive of Grosvenor’s UK property division, said: “It’s incredibly valuable for us.” “We thought long and hard about this. The management and control that was going on was critical.

Also the first major new investment in Norwegian Oil Fund In London from 2018. The fund already owns a stake in Regent Street next to the Crown Estate, and increased its ownership stake last year with a stake in the Pollination Estate near Savile Row in 2014.

The fund last year took full control of the Meadowhall shopping center in Sheffield, paying £360mn for a 50 per cent stake in British Land, and is also a major investor in listed London landlords such as Great Portland Estates.

“We are confident in the long-term value creation in the West End,” said Jayesh Patel, the fund’s head of UK real estate.

The £1.2bn joint venture is just one part of Grosvenor’s £4.8bn UK property portfolio, the majority of which comprises large holdings in the suburbs of Mayfair and Belgravia. Grosvenor retains freehold ownership of the buildings, while the joint venture holds a long lease.

Although respected and highly valued, the core portfolio yields lower returns than riskier ventures. Grosvenor, which has a large agribusiness and overseas investments, said it would invest some of its revenue in the expanding UK. Residential development loan businessThis will fund housing projects across the country.

“It gives us a different kind of return. It’s a much higher yield than the asset. It’s a good balance for us,” Raynor said.

Grosvenor made a strategic decision to bring in a partner to help “release some capital”, which was more attractive than other options such as loans. We are a very long term business. We constantly think in terms of generations. So our approach to debt is very conservative,” Raynor added.

Grosvenor chose to represent a mix of uses for the joint venture’s portfolio, with 45 per cent office space, 30 per cent retail and 10 per cent residential.

Mount Street is known for luxury shops and some of Mayfair’s most famous restaurants such as Scott’s, while Grosvenor Street has more office buildings.

The company will use the money to fund a £1.3bn 10-year development pipeline, which includes the maintenance of Grosvenor Square and a £500m redevelopment around South Moulton Street, near Bond Street station. Grosvenor partnered with Mitsu Fudosan on the South Moulton scheme.