Grainger plc Regulatory News (GRI)

8 Apr 2009 07:00



8 April 2009 

Grainger plc

MARKET UPDATE

Grainger plc ("Grainger" or the "Company"), the UK's largest quoted residential property owner, today provides an update to the market in advance of its interim results announcement for the half year to 31 March 2009, which will be issued on 20 May 2009. 

For the six month period to 31 March 2009 we expect completed sales from our core and retirement solutions portfolio to amount to approximately £55m, which is a decrease of 29% in comparison to the equivalent figure in 2008. Together with gross sales proceeds of circa £28m from our development division, this has meant that we have comfortably met our interest cover covenant test at 31 March 2009. 

In addition to these completed sales we also have a further £31m of transactions in our sales pipeline (with solicitors instructed and contracts exchanged), compared to £20m in 2008. Assuming the sales pipeline completes, we should achieve some £114m of property sales in the current year which places the Company in a strong position for the next testing date on 30 September 2009. The decline in the level of completed sales was anticipated and reflects both the decrease in general house prices and the difficult market conditions in the early part of this trading period. Although these difficult conditions are ongoing, the pipeline position clearly demonstrates the continuing strong liquidity characteristics of Grainger's portfolio. 

Sales made on vacancy and included in completed sales and the pipeline have been made at values approximately 8% below September 2008 valuations. 

We continue to focus on cash conservation through reduced acquisitions. In our core and retirement solutions portfolios, we estimate a total spend of £9m in the six months to 31 March 2009 compared to £96m for the same period in 2008. 

We are also pleased with progress in our development division. In addition to the gross receipts on sale of £19m for our Barnsbury development, as announced in December 2008, we have also recently sold two other sites in London for a total of £8.25m. Within the last fortnight, we have received planning consent at appeal for 252 units at our site in Gateshead and successfully launched our residential development at Hornsey Road, in Islington, London, where we have already secured sales reservations on 17 units out of 92 since marketing commenced in the last week of March. 

We also note that the directors of G:res1 Limited, the parent company of the G:res Fund (the "Fund") have today reported their decision to revise certain elements of the Fund's business plan. These revisions are designed to increase the headroom in the Fund's loan to value covenants and thereby reduce the likelihood of a potential future breach by using cash from previous sales to reduce debt and continuing to dispose of non-core assets with a combined value of £32m. Since 31 December 2008, the Fund has sold or exchanged contracts on £3.7m of assets at values 8% above the valuation at that date. 

The Fund is managed by Grainger, which also holds a 21.6% stake in G:res1 Limited. The debt in the Fund is wholly non-recourse to Grainger and the other investors and there is no other guarantor relationship.

The Company will comment in more detail on its progress at the time of its interim results announcement. 

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