Grainger profits surge by 7%

Grainger’s pre-tax profits surged by 7%, driven by an increase in rental income following major additions to its operational pipeline, during the six months ended 31 March. Net rental income contributed £29.1m to profits (+33%), with profit from sales at £26.5m (-18%). “The PRS income is dominating our business, far more than the historic sales,” said Grainger chief executive Helen Gordon (pictured above). The switch comes as Grainger has repositioned its income profile towards rental income, becoming less reliant on sales of legacy stock. Some £6.5m of rent came from the 1,700-home GRIP portfolio, which Grainger acquired from its joint venture partner APG. A further £1.1m was attributed to rental income and £400,000 to new schemes, including Grainger’s Clippers Quays in Salford. The PRS giant saw like-for-like rents increase by 3.7%, with rental growth for its PRS portfolio of 3.4%. The PRS income is dominating our business, far more than the historic sales Grainger’s operational PRS portfolio value sat at £1.4bn, compared with £591m six months earlier. It has a pipeline of secured and committed rental homes valued at £760m and a further £465m comprising around 8,200 homes in the planning and legal stages, including Birmingham’s Exchange Square, which is expected to go to planning very soon. Gordon said: “This really has been a period of exceptional growth. Our pipeline is now coming through. A lot of our competitors are at the high end and we are staying with our mid-market approach, and that’s coming through in our figures.” She said a further six or seven schemes will be expected to launch this year, including Finzels Reach in Bristol, further phases in Salford’s Clippers Quay and Eccy Village in Sheffield. In the trading update, Grainger said it expected to double its net rental income in the coming years, driving its dividend growth. A major source of future growth will be the 3,000-home TfL jv announced in April. “The good thing is that we’ve got a partner who really wants to see housing in London developed, and we’ve co-located some of the team that will be bringing those sites forward,” Gordon said. Grainger will also focus on developing 300 homes via its jv with Lewisham Council, and looks to other public partnerships with the Ministry of Defence and the Canal & River Trust, among others, for continued growth. “There is a way that local authorities can use land to create more housing in their areas,” said Gordon. Grainger has added additional regions, including Brighton and Sheffield, to its list of cities with interest and has also agreed terms on a site in Belfast, which would be its first in Northern Ireland. To send feedback, e-mail emma.rosser@egi.co.uk or tweet @EmmaARosser or @estatesgazette