Grainger hikes dividend after rental income soars

Grainger has reported a solid set of financial results for the year ended 30 September 2019. The residential landlord reported 3.6% like-for-like rental growth across its portfolio and net rental income jumped by 45% to £63.5m. This helped the business deliver growth in EPRA net tangible assets per share of 1% to 278p. It has also led the firm to increase its dividend for the year by 9% to 5.19p per share. The firm’s purchase of GRIP REIT for £396m in November 2018 contributed significantly to the rise in rental income, accounting for £17.7m, or 28%, of the total. GRIP REIT, which was owned 75.1% by APG and 24.9% by Grainger, added 35 private rented sector assets (circa 1,700 homes) with a gross asset value of £696m. Grainger also reported progress in its efforts to cut costs. The cost of its debt fell from 3.2% last year to 3% and it delivered a reduction in its gross to net (property operating costs ratio) from 32% to 25.1%. The firm’s total current PRS operational portfolio is 8,940 homes, valued at £2.6bn, and the £2bn PRS pipeline is set to deliver 9,104 homes in total. This includes a long-term partnership with Transport for London. An initial seven seeded sites will add 3,000 homes to Grainger’s portfolio. This year, Grainger delivered 1,152 homes and around 1,000 more homes are expected to be delivered in 2020. The firm has also committed in its latest results to transition its operational portfolio to net zero carbon by 2030. Helen Gordon, chief executive of Grainger, said: “We have more than doubled the size of our PRS portfolio and the net rental income of the business since setting out our strategy in 2016. Our £2.6bn residential portfolio and £2bn PRS pipeline is well ahead of our 2020 target. We are delivering our pipeline schemes at pace and will see our net rental income more than double again in the coming years. “Our strong financial performance and the growth in net rental income underpins the proposed increase in our final dividend to shareholders.” Grainger is an early adopter of the revised European Public Real Estate Association measures. The firm confirmed it has adopted NTA per share instead of net asset value per share as its key metric as it excludes the value of intangibles such as technology investment. EPRA said changes to NAV measurement will be introduced for accounting periods starting in January 2020 and that workshops across the continent during the next 12 months will educate property companies on how their reporting will be affected. The new regime will replace EPRA NAV and EPRA NNNAV (triple net asset value).   To send feedback, e-mail anna.ward@egi.co.uk or tweet @annaroxelana or @estatesgazette