Grainger focused on private rented sector as rental growth slows

(Sharecast News) - Residential landlord Grainger reported a 2% improvement in adjusted earnings in its full-year results on Thursday, to £83.5m, even as net rental income was down 4% at £70.6m.
The FTSE 250 company's like-for-like rental growth slowed to 1% for the 12 months ended 30 September, from 3% in the 2020 financial year.

Of that, growth in the private rented sector slid to 0.3% from 2.5%, and regulated tenancy rental growth slipped to 3.6% from 4.6%, both on a like-for-like basis.

It recorded profit before tax of $152.1m, up 53% year-on-year, while diluted earnings per share were 27% firmer at 16.1p.

Occupancy in the private rented sector portfolio stood at 94% by the year-end in September, and was now up to 95%, while rent collection came in at 98%.

A total of six new operational private rented sector assets were added during the financial year, totalling more than 1,300 new homes, making for a record year of delivery with the new properties already 91.5% let.

The company made four acquisitions for £299m during the year, with Grainger saying that the private rented sector now represented 69% of its total portfolio.

Its board proposed a final dividend of 3.32p per share, making for a total dividend for the year of 5.15p per share down 6%, and a total dividend distribution of £36.9m, in line with the prior year's £36.8m figure.

"We have delivered a robust performance for the year, and with our strong strategic momentum we are entering our next phase of dynamic growth," said chief executive officer Helen Gordon.

"Our success has delivered 53% growth in profit before tax, 2% growth in adjusted earnings and passing net rental income 15% ahead of the 2021 financial year, with our resilient regulated tenancy portfolio providing strong rental income growth and strong sales performance, which more than offset the slight reduction in occupancy in our private rented sector (PRS) portfolio caused by the pandemic earlier in the year.

"We are proposing a final dividend of 3.32p per share."

Gordon said the company's "well-established growth strategy" had continued unabated, with its delivery of more than 1,300 new operational PRS homes and four new acquisitions totalling £299m of investment.

"The UK private rented sector, particularly build-to-rent, remains a highly attractive sector to invest in - it proved resilient during the pandemic.

"Our strategy of investing in high quality, mid-market private rental homes in target cities across the UK, identified by our in-house research and aligned to sound responsible business and ESG values, remains the right strategy for Grainger."

Looking ahead, Helen Gordon said the company was planning to increase its growth momentum and build on its £3.1bn operational portfolio of 9,727 rental homes.

"Our £1.9bn PRS pipeline will more than double our net rental income.

"This growth will enable us to further enhance shareholder returns.

"The scalable platform we have developed delivers a compounding effect on earnings growth as we increase our top line rental income, which we expect to increase 2.5 times from our pipeline."

At 0909 GMT, shares in Grainger were up 0.45% at 313.6p.