Grainger reports solid end to financial year

7th Oct 2024 07:17

(Sharecast News) - Grainger, the UK's largest listed provider of private rental homes, flagged a robust full-year performance in an update on Monday, supported by portfolio expansion and strong rental growth.

The FTSE 250 company said it added 1,113 new homes to its portfolio during the 12 months ended 30 September, including the completion of four build-to-rent schemes and the acquisition of a stabilised asset in Manchester.

That expansion contributed to a 6.3% like-for-like rental growth in the private rental sector (PRS) and a high occupancy rate of 97.4%.

In addition to the portfolio growth, Grainger generated £274m from the sale of non-core assets, surpassing last year's total of £194m.

The proceeds from the sales were being reinvested into the company's growth plans, while supporting the balance sheet.

Newly completed build-to-rent developments were leasing ahead of schedule, with high occupancy rates in cities such as Cardiff, Bristol, and Birmingham.

Grainger said Cardiff's Copper Works, launched in late February, was 79% let, while Bristol's Millwrights Place had reached 77% occupancy since its launch in June.

The company had also benefited from a favourable political environment, with the Labour government opposing rent controls and focusing on increasing housing supply.

Chief executive officer Helen Gordon had been appointed to the government's New Towns Taskforce, further aligning Grainger with national housing priorities.

Looking ahead, Grainger said it was optimistic about future earnings growth and its planned conversion to a real estate investment trust (REIT) next October.

"Grainger has delivered double digit rental income growth this year in line with expectations, with strong like-for-like rental growth at 6.3% and whilst we expect rental growth to ameliorate somewhat, we still expect levels to be above the long term historic average for the 2025 financial year," said chief executive officer Helen Gordon.

"This growth is supported by our rapidly growing portfolio, with over 1,100 homes added to our portfolio this year and a pipeline which will double our rental income when compared with 2023.

"Rental growth in 2025 will be underpinned by continuing high levels of wage growth throughout the UK and particularly in our target customer demographics and geographical locations."

Gordon said affordability remained healthy, adding that customer satisfaction scores remained high, demonstrating the sustainability of Grainger's rental income growth going forward.

"The UK rental market continues to experience rapidly accelerating growth in demand, whilst supply remains constrained.

"Our portfolio is 'fully let' with occupancy at 97.4% at the end of September.

"Our ongoing asset recycling programme supports our growth plans whilst preserving balance sheet strength."

Over the year, the firm generated £274m of gross proceeds from disposals, Helen Gordon noted.

"Explicit confirmation by the Labour Government that it opposes rent controls is welcome.

"The government's proposals to reform the planning system to stimulate housing supply and raise standards in the rental market is equally welcome and aligns to Grainger's strategy and existing standards.

"This new financial year will be the last year before Grainger becomes a REIT, a major milestone for the business, reflecting our significant transformation as the UK's Build to Rent market leader that has been underway since 2016."

Grainger said it would publish its full financial results for the year ended 30 September in November.

At 0813 BST, shares in Grainger were up 0.14% at 245.35p.

Reporting by Josh White for Sharecast.com.