Listed landlord Grainger is celebrating a year of "accelerated growth" amid a rise in net rental income and pre-tax profits.
Preliminary results for the Newcastle-based build-to-rent specialist show net rental income grew 14% to £110.1m in the year to the end of September, as IFRS pre-tax profits leapt 48% to £40.6m.
Grainger said it had added 1,236 new homes to its portfolio including across its portfolio clusters in Birmingham, London, Bristol and Manchester. The firm's £31m acquisition of 'The Astley' housing development in Manchester, in the summer, was highlighted as evidence that acquisitions provided growth in a more mature market.
Shareholders in the £3.4bn portfolio business, which has more than 11,000 private rental homes and a £1.4bn build-to-rent pipeline, have benefited from a 14% rise in dividend to 7.55p per share. The results mark the last full financial year before Grainger becomes a real estate investment trust (REIT), providing tax saving of 25%.
CEO Helen Gordon called it a strong year of growth and said she was pleased with the direction of travel from the new Government and its ambitions to increase housing supply via reform of the country's planning regime. Grainger was said to have been "heavily engaged" with policy makers, including those in the Labour Party, to voice its position on investment into private rented homes.
She said: "We have been pleased to see the new Labour Government’s public rejection of rent controls and the acknowledgement that such controls would hurt supply and investment. On the contrary, it has been pleasing to see the Government’s commitment to increase housing supply and investment. Plans to raise standards in the rental sector plays to Grainger’s strengths as a leading landlord with a best-in-class operating platform and a responsible approach to housing provision.
“The market opportunity for the Ƶ build-to-rent sector is considerable with demand for renting growing and the shortage of rental supply worsening, and with its proven track record, Grainger is best placed to help alleviate this through continued investment and housing delivery, accelerating our growth for years to come.”
Grainger expects EPRA (European Real Estate Association) earnings - one of its key measures of success - to rise by 50% over the medium term, with expectations it will reach £60m by the financial year ending September 2026. It also upgraded Ebitda guidance, suggesting margins should rise from 54% today to more than 60% by financial year 2029.
Ms Gordon also said: "Since setting out our strategy in 2016, we have invested £2.5bn into delivering new build-to-rent homes, and at the same time delivered value by divesting £2bn from non-core businesses and assets. Over this period, we have more than tripled the net rental income for the business. In the last year alone, we have disposed of £274m of non-core assets, recycling £270m of this capital into higher yielding, new, high-quality, energy-efficient build-to-rent homes."
Grainger reported income of £290.1m, up from £267.1m last year, and operating profit of £110.1m, up from £96.5m.
