Berenberg raises target price on Grainger

Analysts at Berenberg raised their target price on residential property firm Grainger from 350.0p to 375.0p on Thursday, citing the firm's growing portfolio.

Berenberg stated that with an expanded balance sheet and development pipeline, as well as "increasingly positive market dynamics", Grainger remained well positioned to consolidate its position as the largest owner-operator of build-to-rent private rental sector assets in the UK.

The German bank opted to make an update to forecasts after Grainger's £209.0m capital raise earlier in the month and in light of market strength, increasing adjusted earnings per share forecasts by roughly 18% and non-tangible assets by 3.5%.

Berenberg, which stood by its top pick 'buy' rating on Grainger, added that with residential property values up 10% since September 2020, it expects the open market vacant possession value of the company's regulated tenancy portfolio to have increased by "a similar amount".

"While the full impact of this open market reversion will not be reflected in Grainger's NTA, as assets are sold we expect net revenue from trading property disposals to increase, compounded by higher near-term vacations due, in part, to the impacts of the pandemic. The reversionary value of this portfolio last reported at £286.0m (42.0p), so the current valuation gives little benefit to this upside, which we expect to be realised over our forecast horizon and beyond," said the analysts.