Grainger claims solid growth, gets go-ahead for Apex House

(ShareCast News) - Residential property investment and management company Grainger provided an update on trading for the year to 30 September on Tuesday, reporting "good rental growth" and "strong sales performance" as a result of cost reductions.The FTSE 250 firm said it expects recurring profit for the year to be above £50m, at the higher end of management expectations, as well as high single digit year-on-year growth in NNNAV for the full year.Its board said the year-end valuation process was now underway, and following a strong first half, it expects to report modest growth in the market value of its property assets in the second half, despite changes in stamp duty legislation and market concerns after the EU referendum."This will be offset in EPRA NAV by the swap re-coupon - as noted in the August trading update - and recent movements in the bond markets have had an adverse impact on NNNAV from the mark to market of fixed rate debt," the board said in a statement.Grainger also claimed solid progress with its cost-saving scheme, having completed the majority of its non-core disposals since first outlining the scheme in January.That includes the recent successful disposal of the company's joint venture in the Czech Republic, which was located in Prague."We are pleased to report that the disposal will generate a profit before tax of £9m, which will be treated as a non-recurring item."We remain on target to deliver 24% cost savings in FY17."At the same time, Grainger confirmed the granting of planning permission for the 163-home build-to-rent Apex House development in Seven Sisters, north London.Construction is expected to start in 2017, with the scheme estimated to cost £60m and once fully let in 2020, Grainger is targeting an initial gross yield around 6.5% and net rental income approaching £3m per annum.Apex House is adjacent to Grainger's Seven Sisters regeneration scheme, which has planning consent and will deliver a further 196 rental homes following a compulsory purchase order process currently being undertaken by the London Borough of Haringey."We are pleased with the significant progress made and the way the business is responding to our strategy of growing net rental income, improving operational efficiency and simplifying the business, with the ultimate aim of improving value for all our shareholders and partners," said chief executive Helen Gordon."We have seen a strong and resilient performance despite the changes to stamp duty legislation and the EU referendum, and we look forward to providing further details on strategic progress at our full year results in December." Grainger plc