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Grosvenor and Derwent London are pleased to 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, 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.