Listed landlord Grainger Plc says demand for its rental home remains “exceptionally high” despite wider issues in the housing market.
The Newcastle based business now has a £3.3bn portfolio of around 10,200 homes with a £1.6bn pipeline of a further 5,634 build-to-rent homes on the books. It issued a strong update on trading for the four months to the end of January, ahead of its AGM being held at its Gallowgate head office today.
While the wider housing market has been floundering, Grainger saw like-for-like rental growth of 8.3%, up from 6.1% in the same period last year. Meanwhile, it saw regulated tenancy like-for-like rental growth of 7.6%, up from 6.2%. It said occupancy in its private rented sector portfolio remained high at 97.2%, only slightly down on the previous year’s 98.7%.
Two new build-to-rent schemes, in Birmingham and Bristol, will be the next developments to open with launches planned in March, totaling 606 homes. Grainger said that its regulated tenancy portfolio now represents 23% of the business by value, and that sales generated as homes become empty continue to provide a reliable source of capital for the group’s growth.
Helen Gordon, chief executive, said: “Positive momentum continues within the business, underpinned by our market leading operating platform. We are maintaining strong levels of rental growth with like-for-like rents in our PRS/Build-to-rent portfolio growing 8.4%, while maintaining healthy customer affordability levels. Occupancy remains high at 97.2%. Our forward-looking key performance indicators show continued high levels of rental demand over the coming months, supporting occupancy.
“Sales from our legacy regulated tenancy portfolio continue to perform well with strong liquidity and pricing. The sales market is proving robust with a high proportion of our sales going to ‘best and final’ bids. On average, we are achieving sales prices 2.6% above valuations.
“Since our year end results in November, we have completed 307 homes at The Copper Works in Cardiff and continue with the phased delivery of homes at Weavers Yard in Newbury, with leasing in line with our underwriting assumptions. In the next month we will see two new build-to-rent schemes launching in Birmingham and Bristol totalling 606 homes.
“In line with our stated strategy, we are continuing to build on our geographic clusters of PRS (build-to-rent) developments which delivers operational and financial efficiencies, and we are on track with the delivery of our committed pipeline which will deliver significant growth in EPRA Earnings over the coming years.”
Looking ahead, Grainger said: “The strong, compelling fundamentals of the Ƶ residential rental market continue to underpin our investment case. Demand for renting, and our product specifically, remains exceptionally high. We continue to achieve record levels of rental growth, and should wage growth ameliorate later this year, we expect rental growth to continue be higher than historic averages, driven by our market-leading operational platform.”
It added that, with local and national elections later this year, its “responsible approach to delivering high quality rental homes for the mid-market” is aligned to the main political parties’ priorities. The company will announce its half year results for the six-month period ending March 31 on May 16.
