Grainger reports strong performance and excellent outlook

Grainger reports strong performance and excellent outlook in its half year financial results, with a planned doubling of EPRA earnings.

Reception at Grainger's Enigma Square Build to Rent scheme in Milton Keynes | BTR News
Reception at Grainger's Enigma Square Build to Rent scheme in Milton Keynes.

Grainger plc reports continued strong performance for the six months ended 31 March 2023. With a £3.1bn operational portfolio totalling c.10,000 homes, the company has an additional c.6,000 homes in its £1.6bn Build to Rent investment pipeline.

Grainger’s net rental income increased by 12% to £48m, an important figure as the company distributes 50% of NRI as dividends to its shareholders.

The company’s shares stood at 2.08p per share in its half year 2022 financial results, which has increased 10% to 2.28p.

“We continue to deliver strong consistent performance across the business. For the first half of our financial year, we have delivered an increase in net rental income of +12%, supporting a 10% increase in our dividend. Rental growth momentum has continued to accelerate which has broadly offset yield movements and the net asset value of our portfolio was resilient.”

Helen Gordon, Chief Executive, Grainger

Like-for-like rental growth increased in H1 across Grainger’s total portfolio, +6.8% compared to 3.5% at its half year results in 2022. The company also achieved 8.2% rental growth on new lets, and 6.1% on renewals.

Occupancy levels have remained strong, at 98.5% at the end of March.

“Aligned to wage inflation we achieved a like-for-like rental growth of +6.8%, up from 3.5% this time last year. This has mostly offset valuation yield movements with EPRA NTA broadly stable at 310pps (2% down in the six months since FY22 of 317pps, but +2% up in the twelve months since HY22 of 305p). Strong investor appetite and robust transactional evidence from a number of completed deals in recent months provide us with further confidence in the relative low volatility of our sector.”

Helen Gordon, Chief Executive, Grainger

Grainger reports an excellent outlook following strong performance in H1. This is testament to the team who have focused on ensuring the company delivers high quality homes and service, and a sense of community and belonging – which supports its success in leasing, high retention and occupancy levels.  

The company has four years of secured growth de-risked, funded and locked in. Grainger’s committed pipeline of build to rent schemes will deliver a doubling of EPRA earnings in that time.

“Our balance sheet is in a strong position with a low cost of debt fixed for six years, enabling us to deliver on our committed investment pipeline with returns protected. These plans will see us deliver a doubling of EPRA earnings over the next four years, with our Build to Rent projects secured, financing in place, and both construction and debt costs fixed over that period.”

Helen Gordon, Chief Executive, Grainger

Most of the secured pipeline is committed (£890m) and under construction, with fixed construction costs and funding in place. This will enable the company to convert to a REIT in two and a half years.

Grainger remains on track to deliver seven new schemes this year totalling 1,640 new, purpose-built, energy-efficient, mid-market rental homes.

“We are confident in the outlook for our business. With positive expectations for the occupational market and rental growth, resilience in valuations backed by strong active investor demand, and an institutional-landlord-friendly investment landscape, the outlook for Grainger remains strong as we continue to lead the sector.”

Helen Gordon, Chief Executive, Grainger