Grainger finishes year with solid investment pipeline

Listed residential landlord Grainger reported a £651m secured private rented investment pipeline at the end of its financial year on Thursday, up from £389m at the end of the 2016 year.

The FTSE 250 firm said its net rental income was up 8% to £40.4m in the year to 30 September, with 3.8% like-for-like rental growth across its entire portfolio, slightly down on the 4.1% reported 12 months earlier.

Gross-to-net was down 200 basis points to 26.0%.

Grainger said its overheads were 14% lower at £27.2m, slightly below its £27.5m target, and down from £31.8m in 2016.

Adjusted earnings were ahead 40% at £74.4m, with profit before tax up 2% to £86.3m.

The board confirmed its dividend per share was rising 8% to 4.86p.

Its EPRA triple net asset value was up 5.6% to 303p, with IFRS net assets growing 10.6% to 178p.

During the year, the market value of Grainger’s properties increased by 3.4% - less than the 5.3% in 2016 - while its loan-to-value rose to 37.7% from 35.9%.

The company’s cost of debt further improved to 3.4% as at period end, from 3.9% a year earlier, with total return on shareholder equity falling to 7.3% from 10.6%.

“We have transformed Grainger over the last two years, refocused our strategy and made the business more efficient,” said chief executive Helen Gordon.

£We have continued to deliver strong financial returns.

“We have increased our rental income, secured a significant number of new [private rented sector] investments, simplified and focused the business and repositioned it for further growth.”

Gordon noted that during the financial year, Grainger delivered a 40% increase in adjusted earnings to £74.4m.

“I am also pleased to report a 5.6% increase in EPRA NNNAV to 303p per share and a total return of 7.3% for shareholders.

“The growth opportunity in the UK PRS market is significant and we are well placed with our unique in-house capability to originate, invest and operate.

“We have seen excellent momentum in acquisitions and we have now secured £651m of PRS opportunities since setting out our strategy.”

The future for Grainger remained “exciting”, Gordon added.

“We are a fast-growing business, with great long-term value, and we are delivering a portfolio of good quality homes for rent which our customers, employees and shareholders can be proud of.”