Grosvenor to shoulder bill for 90 Million Pound project overrun

15 Sep 2006 

CONSTRUCTION costs at Grosvenor's Liverpool One development have overrun by up to 90 Million Pounds

The scheme, which will transform the appearance of Liverpool city centre, was already expected to cost £920m. A spokesman yesterday said the company had yet to finalise the eventual cost overrun figure, but added that the provision in this year's accounts will be at least £50m, and could be as much as £90m.

The cost overruns will not affect Grosvenor's intention to complete the scheme. Grosvenor said it was well-placed to cope with the higher costs and insisted it was looking to the long term to measure the success of the Liverpool project, which involves the construction of 1.6m sq ft of new shops and is anchored by Debenhams and John Lewis department stores. Just over half the scheme is let, two years ahead of completion.

Institutional investors that have backed the Grosvenor scheme, including Hermes and Redevco, will not be liable to pay anything towards the rising costs. Grosvenor has agreed to meet the extra bill.

Grosvenor's recently appointed chief executive said cost was not the issue. Mark Preston added that Grosvenor was building the scheme for the benefit of the people of Liverpool, and that the company could afford to take a very long-term view of its activities.

Despite being privately owned by the Duke, Grosvenor tries to match quoted company standards when publishing its annual report and accounts, meaning news about the cost overruns was bound to come out.

The Grosvenor scheme, based around the Paradise Street area, also includes offices, 600 apartments and two hotels, one of which is thought likely to be operated by Hilton.

Rod Holmes, Grosvenor's project director, said last night: "For all of us working in Liverpool, it's business as usual." By Bill Gleeson Business Editor, Daily Post