Grainger’s growth yields 23% rise in adjusted earnings
GRAINGER plc has reported a 23% rise in adjusted earnings to £46.3m on the back of high occupancy across its private rented sector (PRS) portfolio.
The Newcastle-based firm, the UK’s largest listed landlord with a £3.1bn portfolio and £2.4bn pipeline, revealed half-year results showing group revenue of £126.6m in the six months to the end of March, up from £101.1m in the same period in 2021.
Growth was driven by 98% occupancy across the landlord’s £2.2bn PRS portfolio, which now accounts for 71% of the group’s entire portfolio value. Total like-for-like rental growth was 3.5% for the period, up from 1.7% in the same period last year.
Grainger said it had a limited exposure to cladding and fire safety issues as most of its buildings have brick facades, although a review of older projects led it to provision £9.2m – excluded from adjusted earnings – for potential fire safety remediation works on projects Grainger was involved in developing. The firm said where possible, it would recover costs from contractors and insurers.
Chief executive Helen Gordon also said the firm, now in its 110th year, was well prepared for higher inflation, citing fixed-price contracts across 12 of 16 secured pipeline projects, as well as 96% of its debt hedged. Grainger also believes its renters are better off than average and therefore better placed to weather rising costs of living.
Ms Gordon said: “We have delivered a particularly strong performance for the first half of the year with adjusted earnings up 23%, largely driven by our acceleration of growth in net rental income of 23%.
“This is a result of an exceptional lettings performance by the team, which also drove occupancy in our PRS portfolio to 98% combined with like-for-like rental growth of 3.5% and a record rate of lease up of our recent launches. The market has strengthened swiftly over the past six months and we have successfully capitalised on this opportunity.
“We are delivering on our growth plans which will see us double in size in the coming years, providing exceptional earnings growth and attractive high single-digit total returns to shareholders.
“The UK rental market continues to have a hugely attractive outlook with significant demand, rental growth, yield compression, and structural drivers that favour the professional, large-scale landlord.
“At the same time, Grainger is in a strong position as market leader with a scalable national operating platform, fully-funded secured pipeline and fully integrated business model.
“We are well prepared for the economic challenges facing the UK today of inflation and cost of living rises. With a resilient customer base, high-quality energy-efficient homes,
fixed debt costs, fixed delivery costs across the majority of our secured pipeline and limited direct exposure to other inflationary pressures, we are confident in the outlook for our business.”
During the period Grainger made four acquisitions including schemes in London, Exeter and Sheffield, and land in Hampshire. The deals added roughly 1,131 homes to the firm’s build-to-rent portfolio, PRS pipeline and £14m of annual net rental income.
Recently Ms Gordon outlined Grainger’s plans to invest in the North East and its support for the Government’s levelling up agenda. Grainger’s interim dividend was up 14% at 2.08p per share.