Grainger plc’s trading update to January 2024

Grainger plc releases a trading update for the four months to the end of January 2024, ahead of its half year results.

Grainger's Clippers Quay development in Manchester | BTR News
Grainger's Clippers Quay development in Manchester.

Grainger plc releases a trading update for the four months to the end of January 2024, alongside its AGM held this week at its head office in Newcastle upon Tyne. The update comes ahead of the company’s half year results on 16 May 2024 for the six-month period ending 31 March 2024.

The company’s strong earnings growth momentum continues, with two new Build to Rent developments in Birmingham and Bristol launching in March. The schemes will deliver a total of 606 new homes.

Whilst an increasingly smaller part of the business (c.23% by value), sales generated from Grainger’s regulated tenancy portfolio as it unwinds (vacant possession) continues to provide a reliable source of capital for the company’s continued growth.

Grainger continues with its elevated asset recycling activity, selling tenanted properties, portfolios and land to reinvest the capital into its Build to Rent pipeline and new higher-yielding opportunities. They expect to deliver similar proceeds from sales for the full year, including asset recycling, compared to last year. 

The company reports strong rental performance, with total like-for-like rental growth YTD at 8.3%, up 2.2% compared to January 2023. Grainger’s PRS like-for-like rental growth YTD was 8.4%, with New Lets YTD at 8.5% (7.8% in January 2023) and Renewals YTD at 8.4% (5% in January 2023).

The strong, compelling fundamentals of the UK residential rental market continues to underpin Grainger’s investment case, with rental demand remaining high. The company continues to achieve record levels of rental growth and should wage growth ameliorate later this year. Grainger expects its rental growth to continue to be higher than historic averages, driven by its operational platform.

With local and national elections later this year, the company reports that it is comfortable that political and regulatory risk for the business is low, and that its responsible approach to delivering high quality rental homes for the mid-market is very much aligned to the main political parties’ priorities.

“Positive momentum continues within the business, underpinned by our market leading operating platform. We are maintaining strong levels of rental growth with like-for-like rents in our PRS/Build to Rent portfolio growing 8.4%, while maintaining healthy customer affordability levels. Occupancy remains high at 97.2%. Our forward-looking key performance indicators show continued high levels of rental demand over the coming months, supporting occupancy. 

“Sales from our legacy regulated tenancy portfolio continue to perform well with strong liquidity and pricing. The sales market is proving robust with a high proportion of our sales going to ‘best and final’ bids. On average, we are achieving sales prices 2.6% above valuations. 

“Since our year end results in November, we have completed 307 homes at The Copper Works in Cardiff and continue with the phased delivery of homes at Weavers Yard in Newbury, with leasing in line with our underwriting assumptions. In the next month, we will see two new Build to Rent schemes launching in Birmingham and Bristol totalling 606 homes.

“In line with our stated strategy, we are continuing to build on our geographic clusters of PRS (Build to Rent) developments which delivers operational and financial efficiencies, and we are on track with the delivery of our committed pipeline which will deliver significant growth in EPRA Earnings over the coming years.”

Helen Gordon, Chief Executive, Grainger

Grainger plc is the UK’s largest listed provider of private rental homes with a c.£3.3bn operational portfolio of c.10,200 homes, and a £1.6bn pipeline of a further 5,634 Build to Rent homes (as at 30 Sept 2023).