Barclays downgrades Grainger on recent share price strength

Grainger was in the red on Friday as Barclays downgraded the stock to 'equalweight' from 'overweight' following recent share price strength.

It said that although the company posted solid interim results on Thursday, this is now reflected in the share price following the strong performance that has seen it gain more than 11% year-to-date, outperforming the broadly flat FTSE EPRA UK benchmark materially and reaching the bank's unchanged 320p price target.

Barclays said that other than the group progressing on its £850m acquisition target by 2020, there are limited catalysts on the horizon at the moment.

"The last bit of the refinancing has successfully been executed, while we do not expect any accelerating rent growth from here (we expect 3.25% per annum) and future valuation gains to be modest.

"The company upped its acquisition capacity to £1.2bn, yet this was mainly driven by £250mn worth of further asset recycling of existing mature assets, thereby reducing the net impact," it said.

Grainger posted a 9% jump in its net rental income to £21.8m in its half-year results, along with a £756m secured private rented sector investment pipeline, up from £439m year-on-year.

The FTSE 250 residential property landlord said it saw 4.1% like-for-like rental growth across its entire portfolio, with adjusted earnings rising 20% to £40.9m.

At 1510 BST, the shares were down 3.2% to 311.60p.