Grainger PLC (LON:GRI) have made progress in their financial year, as the firm alluded to growth in rental business.
Grainger 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.
Grainger looked forward to their business potential in 2020, and updated shareholders on four new schemes planned for 2020.
The firm said “We have made good progress on our schemes in the planning process, including Exchange Square in Birmingham (375 PRS homes, c.£77m), and the redevelopment of one of our regulated tenancy assets in Waterloo, London, where we secured planning consent to increase the site from 69 homes to 215 PRS homes.”
Grainger senior management have continued to praise the growth and development of their PRS portfolio.
Helen Gordon, Chief Executive, said:
“I am pleased to report a period of continued momentum in our PRS growth strategy, as the UK’s leading provider of private rental homes. We have made good progress on a number of schemes in our pipeline, including those in the planning process and new acquisitions. Lettings on our recently launched schemes are progressing well and ahead of underwriting, a testament to the quality of the design of our buildings and customer service offering. We are seeing a growing customer demand for our rental homes across the portfolio with 97.5% occupancy and 3.5% like-for-like rental growth. Supporting our new build investment, sales from our regulated tenancy portfolio are transacting well, reflecting positive market sentiment.
“Since our last financial year end, we have secured two further schemes in line with our targeted investment strategy: Capital Quarter (307 PRS homes) in Cardiff for c.£57m, and our third scheme in Canning Town (132 PRS homes) for c.£55.5m. In addition, we have received planning consent for the redevelopment of one of our regulated tenancy assets in Waterloo, London.
“Investment in our CONNECT technology led platform, which provides a leading differentiated experience for our customers and enhances our operational capability, is delivering early results on our new schemes, with wider roll out of the platform anticipated later this year.
Grainger remained confident for their business in 2020, and shareholders will take much hope and optimism for the firm to bring consistency across 2020.
“The outlook for Grainger in 2020 is positive. Grainger is in a strong position to benefit from the market opportunities following the clear result of the General Election which is already driving improved housing market sentiment. The business is ready and equipped to deliver on our PRS growth strategy, which in turn will deliver attractive, sustainable returns to shareholders and, importantly, enable us to provide great homes and great service to our growing customer base.”
Grainger break political constraints
In November, the firm updated the market saying that it had seen income rental growth across its financial year.
The FTSE250 said for the financial year to September 30, its net rental income grew 45% to £63.5 million from £43.8 million in 2018.
The strategic focus on the UK private rented sector continues to deliver real growth in the business, underpinned by strong demand for rental homes across the country.
Profit before tax rose 30% to £131.3 million from £100.7 million, the company said. As a result, the company proposed a final dividend of 3.46p per share, which showed a 9% rise from 2018.
Total dividend for the year was 5.19p, which again saw a climb from 4.75p in 2018.
Welsh acquisitions
Following on from the impressive update in November, Grainger announced that they had made two new acquisitions as part of their strategy to grow and expand.
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.
The residential property provider said, apart from private rental homes, the scheme will deliver a range of amenities for residents, including a rooftop lounge and terrace.
Grainger said it expects this investment to generate a gross yield on cost approaching 7% once stabilized, with completion anticipated in mid-2022.
Grainger have managed to overcome numerous hurdles in the last year, and the property market has been hit by Brexit complications.
Shareholders will pleased from today’s update, and certainly this shows the hungry nature of the firm to grow in a property market that still seems to be recovering from external shocks.
Shares in Grainger trade at 305p (+2.62%). 5/2/20 12:01BST.
