Positive 2024 half year results for Grainger

Grainger plc releases its half year results alongside Build to Rent scheme launches and its geographic spread of homes.

Grainger plc's The Tiltworks Build to Rent development | BTR News
Grainger plc's The Tiltworks Build to Rent development.

Build to Rent landlord Grainger plc releases its 2024 half year results. The company’s current portfolio worth £3.5bn totals c.11,000 homes, with a further 5,068 homes in its total £1.5bn Build to Rent investment pipeline. 

Grainger reports double digit rental income growth – with net rental income up 11% to £53.2m compared to £48m in 2023.

Grainger reports strong adjusted earnings of £44.4m, reflecting the strategic divestment of the regulated tenancy portfolio, realising significant capital to re-invest in Build to Rent assets.

High occupancy levels were achieved – at 97.7% with a high retention of tenants at 62.9%. The company’s like for like rental growth was 8.1%.

Dividend per share was up 11% to 2.54p compared to 2.28p in 2023 and 50% of Grainger’s net rental income was distributed as dividends. The company is on track for REIT conversion by October 2025.

Grainger’s scalable platform delivers compounding growth as its PRS portfolio grows and strong like for like rental growth is generated. The company expects to deliver significant EBITDA margin accretion from 53% in FY23 to 60% over the next five years, through the successful delivery of its pipeline and leveraging its efficient, scalable operating platform.

Grainger has achieved a strong track record of successful transactions, with £1.7bn of disposals and £2.5bn of new investment since its strategic review in 2016.

Grainger expects EPRA Earnings to grow to £55m by FY26 and is targeting a Sustainable Total Accounting Return of 8%

Strong balance sheet and ability to asset recycle

Grainger is a highly cash generative business and each year it delivers c.£200m of operating cash flow.

With fixed debt costs in the mid-3% over the next five years, the company’s loan to value is 39.1% and Grainger has cash and available facilities of £433m, with HY24 investment of £122m in its delivery of the company’s PRS pipeline.

Impact of Multiple Dwellings Relief (MDR)

Considering the MDR changes due to be enacted on 1 June, Grainger’s broadly stable underlying valuations of 0.3% is down 1.9%. MDR impacted the Group valuations by £59m – the Group’s operational portfolio valuation totals £3.6bn. 

Grainger confirms that the impact of MDR is not a cash cost to the business.

2024 Build to Rent scheme launches

So far this year, Grainger has launched several Build to Rent schemes totalling c.1,000 homes. These include:

Copper Works in Cardiff – a 307-home scheme (NRI: £3.5m) which includes a 4,697 sq ft rooftop with floor to ceiling glass windows offering panoramic views over the city, among other amenities and commercial space on the ground floor.

Millwrights Place in Bristol – a 231-home scheme (NRI £3.3m) which topped out in mid-2022. The scheme includes several amenities and shared entertainment spaces, alongside co-working spaces custom-made for those working independently or running their own business. 

Silver Yard, Exchange Square in Birmingham – a 375-home scheme (NRI £4.7m) which is within walking distance to many of the city’s key landmarks and shopping areas.

Hale Wharf in Tottenham Hale – a 65-home scheme (£1.3m) that Grainger acquired for £28m in 2023. The development includes c.1,900 sq ft of commercial space set across the two blocks.

Geographical details of Grainger’s operational and pipeline schemes

  • North East: Newcastle – 381 operational homes.
  • North West: Manchester and Liverpool – 1,742 operational homes.
  • Midlands: Birmingham, Derby and Nottingham – 1,148 operational homes.
  • South West and Wales: Bristol, Exeter and Cardiff – 1,051 operational homes and 1,102 in the pipeline.
  • Yorkshire: Leeds and Sheffield – 1,043 operational homes.
  • South East: Milton Keynes, Newbury, Oxford and Guildford – 1,949 operational and 432 homes in the pipeline.
  • London: 4,805 operational homes and 2,377 in the pipeline.