Grainger PLC (LON:GRI) have told shareholders that they intend to raise £185 million to fund company expansion.
The residential property firm said that the funds raised would allow the firm to pursue new acquisitions and develop projects currently in the planning and legal phase.
Grainger said that they expect to place 61.2 million new ordinary shares through an accelerated book build. The firm has yet to fully disclose the price of these additional shares and formalities have not been revealed.
The share placing will also happen alongside a £120 million debt financing, which is estimated to raise aggregate funds of £305 million for the firm.
Helen Gordon, Chief Executive commented:
“We have real momentum in the business and now is the right time to invest for the future and increase our investment in our secured pipeline. Over the last four years, we have transformed Grainger into the UK’s leading provider of private rental homes, with c.9,000 operational rental homes and an attractive and growing pipeline of opportunities for over 9,000 more new private rental homes. Today’s placing will enable us to bring forward £246 million of investment for four new schemes, three of which are in strong regional cities, delivering 1,160 new homes, as well as expand our planning and legal pipeline, accelerating the delivery of net rental income and earnings growth.”
The UK property market is looking to bounce back from previous setbacks. Both Brexit and wider political complications have taken their toll on the property market, however some clearance has been given.
Following this, Grainger have remained confident to now captivate a recovering property market and accelerate their growth through new acquisitions and organic growth.
Gordon concluded: “The outlook for the UK’s private rented sector is positive, with growing customer demand and structural undersupply supporting the investment case. With our deep knowledge and experience in the market, we are able to deliver long-term, sustainable returns through our targeted investment strategy, coupled with our strong operational platform.”
“Grainger’s integrated owner-operator business model delivers enhanced returns at scale, and today’s placing will allow us to further grow our business in high-quality rental homes and deliver great service to our customers, which in turn will drive long-term shareholder value.”
Grainger’s business in Wales
In December, Grainger announced that they had completed an acquisition deal in Wales.
Grainger alluded to the new acquisition of a capital quarter in Cardiff Wales for a reported £57 million. The terms agreed include a forward funding and the acquisition of a 307 home project in the capital of Wales.
Grainger alluded to the growing nature of the Welsh property market due to its strong economic prospects and growth potential.
The home is currently being developed by IM Properties, with Winvic Construction Ltd acting as contractor.
Grainger said it expects this investment to generate a gross yield on cost approaching 7% once stabilised, with completion anticipated in mid-2022.
Strong performance within private rental sector
A fortnight ago, Grainger updated the market by praising their private rental sector growth.
The firm praised the strong performance of its private rented sector portfolio, at a time where the property market has been hit by external shocks and political complications.
In the four month period, which ended on January 31 Grainger said that overall like-for-like rental growth was 3.5%, with a 3.0% rise on a like-for-like basis on the residential landlord’s PRS homes.
The property investment firm said that its private rental sector had continued to perform well, with occupancy at 97.5% and a strong sales performance in the period, with pricing 0.8% ahead of valuations.
Grainger’s PRS development pipeline as at January 31 stands at 24 schemes, representing 9,104 homes and around £2.00 billion in investment, an impressive stat for shareholders to note within today’s update.
From the total portfolio, £845 million is related to internal company investment, £600 million from a joint venture deal with Transport for London and £570 million from opportunities in the planning and legal stages.
Shares in Grainger trade at 312p (+0.13%). 13/2/20 15:13BST.