Grosvenor, the property company owned by the Duke of Westminster, has tapped the international bond markets to raise £90m to invest in the development of its London estate, spanning some of the UK’s most expensive addresses.

The privately owned group has issued unsecured long-term loan notes, priced to yield 3.91 per cent, reflecting the market’s continued belief in London property as a safe investment. The issuance follows a £125m raising by Grosvenor at the start of last year.

The decision to tap the debt market comes as bank lending to property companies continues to decline, ahead of tougher regulatory measures that will increase the amount of capital that banks must hold against loans secured on commercial property.

“We still have access to considerable lines of finance but it is sensible to seek to diversify funding for our development programme,” said Roger Blundell, Grosvenor’s finance director.

Grosvenor, which owns and manages a £5.8bn estate, is building a number of high-end property developments in Mayfair and Belgravia, including the 75-room luxury Beaumont Hotel. The company, of which the Duke of Westminster is the single shareholder, also owns a large amount of rural land and dairy farms in the UK and Spain.

“With interest rates remaining very competitive, we felt this was a good moment to follow-on from our successful issue last year with another private placement,” Mr Blundell said.

A handful of large property businesses in the UK have tapped the US private placement market, where companies can arrange bespoke lending agreements with institutional investors, in a bid to get away from over-dependence on bank lending.

Since 2010, UK property companies have tapped the private placement markets for more than $2bn, according to data from Royal Bank of Scotland. In May this year, Great Portland Estates, the central London-focused real estate investment trust, raised $200m.

The majority of the deals have been oversubscribed with investors keen to get access to the UK’s more financially stable property companies.

The sterling denominated notes issued by Grosvenor consist of two tranches: £60m of 10-year notes maturing in 2022 with a coupon of 3.38 per cent, and £30m of 25-year notes maturing in 2037 with a coupon of 4.97 per cent.

RBS, which acted as sole bookrunner on the deal, could not be reached for comment.

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